When the joint House-Senate budget committee met Friday afternoon, the jokes were flying and backs were slapped filling the room with optimism the two sides finally had agreed how to spend $6.7 billion in general fund money.
Then, the meeting started.
Weve made you an offer, a visibly frustrated state Rep. Brian White, R-Anderson, said to Senate Finance Committee chairman Hugh Leatherman, R-Florence. Yall can think it over the weekend if you want.
No, no, Leatherman countered. Well let yall think it over.
Weve thought it over, White said. And youve got our offer, all right? Im done.
What followed was hours of bickering and closed-door meetings. The result was no agreement on how to spend $1.4 billion in new tax money in a fiscal year that starts just seven days from now.
If lawmakers cannot reach an agreement by July 1, state government most likely would not shut down. But it would limp into the new budget year, continuing under last years budget. School districts would take an automatic $56 million cut, money that is mostly designated for teacher salaries. About 70,000 children would not get health insurance because the money to pay for it is not in the old budget.
The State Law Enforcement Division would have to stall hiring 45 new agents and 38 support staff including people to work on avoiding losing access to the FBIs criminal database, which law enforcement leaders warn would hinder S.C. cops in their fight against crime.
And raises for teachers and state employees would be delayed.
House and Senate lawmakers agree on all of those things.
They even agree on a tax cut.
They just cant agree on how big that tax cut should be.
The House wants to cut taxes for certain business owners to 3 percent from 5 percent. State economists project that tax cut would cost the state $64 million of its estimated $6.7 billion budget or less than 1 percent. It would affect 58,884 of the 2.1 million South Carolinians who file state tax returns, or less than 3 percent.
The disagreement: The GOP-controlled House wants to pay for all of the tax now. The Republican-majority Senate wants to pay for some of the tax now and the rest in future budgets.
In making their point, senators characterized the House proposal as a tax cut for the wealthy. Just more than half of the $64 million tax cut would go to the wealthiest 5 percent of taxpayers eligible for the break taxpayers who have more than $400,000 in annual taxable income. The rest of the tax cut would be divided up among 55,740 tax filers.
We cant sell to the South Carolina Senate a $60 million tax cut for the wealthy in this particular budget, said state Sen. John Land, D-Clarendon, one of six negotiators on the House-Senate conference committee.
But House Republicans said they only can approve a budget with $1.4 billion of new spending if part of that new spending goes to a tax cut.
When you have (tax cuts) in your businesses, youre not putting that in your pocket. You are reinvesting that in the business, said state Rep. Murrell Smith, R-Sumter.
House lawmakers want $60 million for the tax cut, while senators will only agree to $20 million with the promise of another $20 million in the next two budget years. With only $40 million separating lawmakers from a budget deal, House Minority Leader Harry Ott, D-Calhoun, tried several times to play peacemaker.
I just cant imagine that thats enough difference for us to let the teachers know that they are not going to get a pay raise, for us to not let local governments go on and plan their budgets, he said. We are right there.
One other sticking point: $13.2 million for the state to buy some land at the State Farmers Market. The money would go to Bill Stern, chairman of the State Ports Authority and a frequent campaign contributor to both Democrats and Republicans. The House set aside $200,000 for the purchase.
Were not going there, Rep. White told Sen. Leatherman. You cant get some things on your side. Thats a definite no-go on ours.
However, White and his fellow House budget negotiators later increased their offer to $1 million for the Farmers Market deal. Senators rejected that.
I dont even consider what you sent an offer, Leatherman told White.
Late Friday night, lawmakers agreed to break for the weekend. But White, the House budget chairman, said he was confident the two sides would reach an agreement and asked the committee to come back at 9 a.m. on Monday.
I hope yall will be back on Monday, Leatherman said.
Reach Beam at (803) 386-7038.