Republicans in the S.C. House chose Wednesday to help businesses pay their unemployment taxes and to spend more money wooing new companies to the state.
But not before House Democrats spent nearly five hours arguing state money would be better spent on paving roads and helping homeowners avoid foreclosure.
Still, the final day of House debate of the state’s $23 billion budget ended on a rare note – a unanimous 115-0 vote to approve the budget proposal.
Democrats and Republicans united to approve a budget that:
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• Gives teachers and state workers a 2 percent raise
• Sets aside $180 million to deepen the Charleston port
• Expands the state’s health insurance program for low-income residents by adding 70,000 children.
“While nobody gets everything they want – and I’m speaking mainly to the Democrats in here right now – we got a good bit,” said House Minority Leader Harry Ott, D-Calhoun. “You should hold your heads high.”
Lawmakers voted to spend all but $315,411 of the more than $6 billion in general fund money that the state expects to collect – mostly from state income and sales taxes – in the year that starts July 1. That leaves no room for $140 million in tax cuts requested by Gov. Nikki Haley or $220 million in tax cuts that House Republicans have proposed. Discussion of those tax cuts will begin next week.
Haley, whose office did not respond officially to the House action Wednesday, says that means South Carolinians will not see any tax relief next year. But House Republicans say they easily can amend the budget if the Senate approves proposed tax cuts.
Lawmakers made two significant changes to the budget during three days of debate – shifting money to school districts to help give raises to teachers and taking $30 million from local road repairs and giving that money to businesses to help them pay their unemployment taxes.
However, not every school district employee could see a raise. Lawmakers allowed districts to opt out of the raises if they can prove they can’t afford them.
And the extra $30 million to help businesses pay unemployment taxes – on top of the $47 million lawmakers previously had budgeted for next year – is not enough to keep taxes from increasing for some businesses.
Lawmakers needed to add a total of about $95 million to keep the tax rate the same, according to the Department of Employment and Workforce.
“The biggest problem with the (unemployment taxes) is that it’s a moving target,” House Speaker Bobby Harrell, R-Charleston, said. “Last week, we were told it was $47 million. Now, we’re told it’s $90-something million. Who knows what they are going to tell us it is next week?”
Democrats proposed using money from the state’s savings account to fully pay for the higher unemployment taxes, a move that would have left $30 million to help struggling local governments balance their budgets.
But Republicans, wary of depleting the state’s reserves so soon after the budget deficits of the Great Recession, voted down that proposal.
Democrats also attempted to take about $12 million from the state Commerce Department and use it to help homeowners avoid foreclosure. The money is part of a nationwide $25 billion settlement against the country’s five largest mortgage lenders.
Most of that money will go to affected homeowners. But $2.5 billion of it is set aside for states.
Democrats said South Carolina’s share only can be used for mortgage relief, per the terms of the court-approved settlement.
“We are setting ourselves up for getting sued again, and losing again,” said state Rep. James Smith, D-Richland, referring to past lawsuits the state has lost.
But Republicans, led by state Rep. Gary Simrill, R-York, argued the State Housing Authority already has programs to help homeowners avoid foreclosure – leaving the state free to spend its share of the settlement as it pleases. House budget chairman Brian White, R-Anderson, said lawmakers relied on state Attorney General Alan Wilson’s office in crafting that spending plan.
A spokesman for Wilson declined to comment, saying in an email, “The Legislature appropriates state money.”