COLUMBIA — The South Carolina House on Wednesday updated its budget plan to fully fund a tax break for small businesses and designate the full $300 million needed to deepen the Charleston Harbor.
House members voted 61-46 to amend what the Senate approved two weeks ago and return it to that chamber. The move sets up negotiations for a compromise between the two chambers’ spending plans, to be worked out over the next couple of weeks.
The House initially passed its budget in March. That was before state economic advisors revised revenue projections for the current fiscal year and the one starting July 1, giving the Senate an additional $292 million to allocate.
On Wednesday, the House put its own spin on using that money.
“This is a solid, fiscally conservative, balanced spending plan that limits government growth while responsibly planning for our state’s economic future,” said House Speaker Bobby Harrell, R-Charleston.
The amendment uses $65 million to immediately reduce the income tax rate that small business owners pay on their profits from 5 percent to 3 percent. The Senate phased that in over four years, reducing revenue in the fiscal year starting July 1 by $15 million.
Senate Finance Committee Chairman Hugh Leatherman has said it’s more important to fund agency needs after years of budget cuts, than to further cut taxes.
The House’s latest plan adds $120 million toward the port dredging project, to cover the federal government’s share if necessary. Both the House and Senate plans already cover the state’s $180 million portion of dredging the harbor to 50 feet to accommodate mega-size ships — a project called essential to the state’s economy.
But the feasibility study alone isn’t set for completion until late 2014 at the earliest. Democrats noted there’s no way that money would be spent on the ports in the next fiscal year. They wanted to give more money to local governments. The Senate plan provides an additional $40 million, which is still less than what’s called for in state law, while the House amendment would give $10 million.
“Out of $300 million, we can only find $10 million to give to local government?” asked House Minority Leader Harry Ott, D-St. Matthews. “If you don’t fund local government, you’re voting for a tax increase or cut in local service for your constituents.”
If the $120 million put in reserves for the port isn’t spent over the next year — a nearly guaranteed scenario — then the House amendment designates where the money would go: $30 million toward bridge repairs, $30 million for Medicaid, $36 million to cover a penalty from the federal government on special education funding; and $20 million for long-term debt in retirees’ health premiums. The Senate plan directly funds the latter two.
The House insists on 2 percent pay raises for most state employees, rather than the 3 percent provided by the Senate. However, the House did concur with adding $48 million to provide teachers guaranteed raises of at least 2 percent. And it agreed to fully fund increases in state employees’ health care premiums.
The House budget provides for 12 new judges — six in family court and six in circuit court. That’s six more judges than the House initially approved and three more judges than the Senate’s plan. Chief Justice Jean Toal has for years asked for more judges to relieve severe backlogs, noting the state’s trial judges have the highest caseload in the country.
The House sets aside a single dollar for phase two of the State Farmer’s Market, which opened in Lexington County in 2010. The Senate gives the full $16 million requested by Agriculture Commissioner Hugh Weathers.
The bulk of the requested money would buy property now owned by Bill Stern, chairman of the State Ports Authority. The agency says it needs to buy the critical assets while they’re still owned by one person, so the state can own and expand arrival gate operations, the retail market and wholesale section.
“It has become very chaotic,” said House Majority Leader Kenny Bingham, R-Cayce. “The only way to remove deed restrictions is to acquire the property.”
House members balked at the project and its lack of vetting through the chamber.
“This doesn’t smell right,” said Rep. Ralph Norman, R-Rock Hill. “You’re putting public money in private developers’ hands.”
The agency insists the land would be bought below market value, and Rep. Boyd Brown, D-Winnsboro, said he changed his mind to support the idea after seeing appraisals.
Ways and Means Chairman Brian White said the details will be worked out in conference committee after the proposal’s fully evaluated — whether that includes purchasing all of the land or funding specific pieces of the project, such as better signage, estimated at $500,000.
“If we find out we’re getting a good deal, we can do that,” said White, R-Anderson..