COLUMBIA — A panel of South Carolina House and Senate members failed Friday to break a stalemate on the state budget, despite meetings that continued late into the night.
The conference committee is attempting to reach a budget agreement before the fiscal year starts July 1. The session was the panel’s first public meeting since Monday.
The chambers remain at an impasse over $40 million. The House is insisting on a $60 million tax break for small business owners, which would immediately reduce the income tax rate they pay on profits from 5 percent to 3 percent. The Senate has upped its offer by $5 million, to a $20 million break, and promised to make it part of a three-year phase-in.
House Ways and Means Chairman Brian White said anything less than the full $60 million right away is a nonstarter, however.
“We’re still stuck on the same issue,” said White, R-Anderson. “I think we made you a fantastic offer. We’re pretty much done.”
With White and Senate Finance Chairman Hugh Leatherman both adamant that their chambers would agree to nothing else, the committee remained deadlocked on the difference. Both sides pointed out that the end result would be the same – the House’s version would just give the full break in one year instead of three.
House Minority Leader Harry Ott pleaded with senators, saying $40 million out of a $6.7 billion spending plan shouldn’t hold up a budget and put everything else in limbo, including school districts across the state that have already passed their budgets based on the undisputed portions of the chambers’ proposals.
Senate Minority Leader John Land agreed, under the argument that the House should give.
“I think we’d be irresponsible if we didn’t go ahead and come to terms,” said Land, D-Clarendon, arguing against the members packing it up for the weekend.
The committee recessed in the afternoon, with the hope of reaching agreement when they reconvened. But the break stretched into hours. They reconvened about 10 p.m. for a few minutes, only to congratulate each other on the work done so far. They will meet again Monday morning.
The two sides also found a way around the debate over making permanent law with the budget.
Lawmakers once routinely attached bills they couldn’t get through the regular process onto “part two” of the budget, allowing items to become law with little scrutiny. That’s how, in 1985, a late-night amendment ushered in the era of video poker. Legislators abandoned the practice in 2000 to stop abuse of it. In the decade before that, budgets contained nearly 600 part-two additions.
House Republicans wanted to revive the option for the small business tax, because the House proposal for reducing it died in the Senate. Without the part two provision, the House said, any agreed-to amount would be for one year only, with no written direction for implementing it.
In a work-around, White and Leatherman have agreed to add the tax cut language to a resolution already approved by the House, which would continue to fund government at current levels if the Legislature can’t pass a budget in time for the fiscal year’s start.
“We’ve both agreed we’re going to do permanent tax reform. Now we’re down to dollars and cents,” White said.
The House also offered to provide up to $1 million for phase two of the State Farmers Market, which opened in Lexington County in 2010. The Senate’s version gives the full $16 million requested by Agriculture Commissioner Hugh Weathers.