Support for cigarette tax plan may be eroding | The State

House lawmakers said a Senate proposal to use cigarette taxes to pay for rural water, sewer and other infrastructure could further erode already tenuous support for raising the tax.

The Senate approved a 50-cent increase last week, amending the bill so that $3.5 million was earmarked to match local money for water, sewer and other projects designed to attract jobs to the Interstate 95 corridor. The amendment passed with broad support, but Lexington Sen. Jake Knotts said he could vote against the tax because other parts of S.C. did not similarly receive funding.

The issue is significant because every vote will be crucial to reach the two-thirds majorities needed to overturn a likely veto by Gov. Mark Sanford. Sanford said last week he would veto any cigarette tax hike that does not include an equivalent tax cut.

South Carolina has the nation's lowest cigarette tax at 7 cents per pack. The national average is $1.36 a pack.

The I-95 money is an S.C.-scaled version of the national health care debate, where special deals intended to secure votes - "Cornhusker Kickback" and "Louisiana Purchase" - helped foment opposition to the bill.

The I-95 money further frustrates advocates of passing the tax, who want lawmakers to focus on cutting the smoking rate by raising the tax. Hospitals and other health care groups want the money put into Medicaid, a state-run health program for low-income residents.

Both General Assembly chambers have twice approved a 50-cent tax increase, but advocates have seen side issues clutter the debate and derail the bill several times the past few years.

"I think the only way it will pass the House is if (the I-95 money) goes (away)," said House Ways and Means chairman Dan Cooper, R-Anderson, who has opposed raising the tax. "I think that's what will happen when it comes back to the House. It will all go towards Medicaid."

The I-95 incentives were just one of a handful of carve-outs from the estimated $136.1 million a 50-cent tax increase would generate.

Other carve-outs include:

- Agriculture marketing - to aid farmers selling less tobacco - would receive $2.7 million.

- The Medical University of South Carolina's Hollings Cancer Center would get $5 million.

- Smoking-cessation programs would receive $5 million.

That $16.2 million would come off the top before any cigarette tax revenue went to paying for Medicaid. The federal government typically offers a 3-1 match for every state dollar spent on Medicaid. That money could help close a projected $600 million Medicaid budget shortfall beginning July 2011, as well as paying for an estimated $914 million in S.C. costs related to the recently approved federal health care law.

Kelly Davis with the South Carolina Tobacco Collaborative, a coalition of nonprofits and public-health groups that support raising the tax, said the most popular plan among the public is to put all the money into health care. Davis said supporters are concerned about the add-ons, but glad the bill is still moving forward.

"Some of us watching said anything else probably lost us some votes," she said. "It remains to be seen how the bill takes shape before it gets to the governor's desk."

Senate minority leader John Land, D-Clarendon, said the earmark was a compromise to secure Democratic votes. He did not view the I-95 money as a poison pill for the cigarette tax.

"This is a good way to replace the jobs we're going to lose," Land said, referring to tobacco farmers. "Democrats brought 19 votes to the table and this is all we asked for. . . . We would be the ones losing; give us something back."

Land did not say that if the I-95 money were removed, it would be a deal-breaker for Senate Democrats, who have long pushed to raise the tax.

House minority leader Harry Ott, D-Calhoun, said he had to study the proposal and speak with fellow House Democrats before supporting or opposing the proposal.

"How we spend the money has always been as much of a hurdle as the tax," Ott said. "I think some of it needs to go into a (general) savings account."

Likewise, House Speaker Bobby Harrell, R-Charleston, said he would gauge House members during the second week of their Easter furlough. Both the House and Senate return the week of April 12.

Harrell said his preference still was to use the tax revenue to help small businesses purchase insurance for their employees. Senate Democrats, led by Land, rejected that idea last year over concerns the tax would not generate enough money to broadly expand coverage.

"I'm certain that using the bill for things other than health care will cause some concerns," Harrell said. Harrell said he would speak with Senate leaders and "figure out if there is a compromise in there somewhere."

But after a decade of debate, Cooper said many lawmakers are ready to take on issues other that the cigarette tax year after year.

"I think they are tired of talking about it," he said. "Tired of being questioned about it."