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Bad budget news, gov’s rebuke await SC lawmakers

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COLUMBIA, S.C. (AP) — South Carolina legislators will take up a rebuke of Gov. Mark Sanford and try to quickly turn to issues tied to recession-wrecked state finances, new lawsuit limits and property tax breaks.

While they’ll talk about tax breaks in the midst of plans to cut state spending by 20 percent, legislators will also talk about raising the nation’s lowest cigarette tax.

House Speaker Bobby Harrell expects the House to quickly deal with a resolution rebuking Sanford for travel and spending issues that came to light after his June confession of an affair with an Argentine woman. The censure measure castigates Sanford for “dereliction in his duties of office, for official misconduct in office and for abuses of power while in office that has brought ridicule and dishonor to himself, the state of South Carolina, and to its citizens.”

While it’s expected to pass the House, the measure faces an uncertain path in the Senate, where any objections would likely kill the measure. Senate President Pro Tem Glenn McConnell says a nonbinding resolution “is just not worth spending a lot of time on” when other issues are far more important.

Harrell and McConnell share priorities in an election-year session for House members that’s again likely to be shortened as legislators cut spending to keep their budgets balanced.

Putting the state’s finances in order to brace for economic shocks is at the top of the list. Harrell jokes his three top priorities are “the economy, the economy and the economy.”

It’s not much of a stretch given a budget battered by some of the nation’s highest unemployment and plunging tax collections. Three years ago, the annual spending bill was $7 billion. Repeated budget cuts, including $439 million since September, have left legislators with only about $5.3 billion as they start writing the fiscal 2011 spending plan.

After covering property tax breaks, repaying money borrowed from reserves and covering debt, state budget estimates show lawmakers will need $563 million more in budget cuts to balance the budget. Pressures on the budget aren’t letting up as soaring unemployment drives demands for Medicaid and other social service programs. Meanwhile, federal help to cure state budget meltdowns looms as a problem with $752 million in aid disappearing in December 2010.

“When that money disappears — unless the economy has revived — we’re facing more cuts,” McConnell said.

It’s a budget nightmare that has schools, colleges, health, social service expecting a minimum of 10 percent in new budget cuts by July, on top the 9 percent they’ve taken this year. And most agencies finished the last fiscal year losing about a quarter of their budgets.

Harrell and McConnell, both Charleston Republicans, say the shortage of cash now and for years to come will propel debate on bills that help the state better weather economic swings by, among other things, enlarging state reserve accounts.

“We have learned over the last few years that swings in revenues can be pretty dramatic so we know that reserve funds aren’t big enough,” Harrell said.

“Our focus has to be on putting our fiscal affairs in order as quickly as we can,” said Sen. Larry Martin, R-Pickens.

It’s not all budget and fiscal overhaul.

Senators will immediately be faced with resuming debate on a bill aimed at easing property tax shocks for people buying existing homes tied to a 2006 break for homeowners on property taxes. That legislation, which has already cleared the House, slowed local tax bill growth on homes until they are sold.

Legislators say sticker shock tax bills on the full assessed value of homes is making the recession worse and recovery slower. But local governments with their own budget problems stand to lose $52 million with the legislation.

Limiting lawsuit awards isn’t far behind as a priority, Martin said. It would broaden 2005 limits placed on medical malpractice claims to other litigation. For instance, pain and suffering awards would be limited to $1 million and punitive awards against larger employers could be no more than three times the actual damages or $250,000, whichever is more.

It “can be the dealmaking difference in economic recruitment,” said Cam Crawford, executive director of the South Carolina Civil Justice Coalition, a group backing the bill.

Meanwhile, Martin expects debate on a plan to increase the state’s cigarette tax, now the nation’s lowest at 7 cents a pack. The version Harrell pushed out of the House last year generated $139 million for a new private health insurance program for low-income workers with a 50 cent-a-pack increase. The Senate’s version created a trust fund to use the cash for future health care needs.

With deep spending cuts in looming in health care, more may be needed, said Sen. Joel Lourie, a Columbia Democrat who’s pushed a tobacco tax increase for years. For instance, Sanford’s executive spending plan called for cutting $107 million from health care programs, mostly in Medicaid.

“Now it’s more critical than ever that we get that cigarette tax passed this year,” Lourie said. And he wouldn’t be surprised if the tax rises closer to the national average: $1.34 a pack.

Legislators also are eager to restructure the Employment Security Commission. A House panel last week said it would get a jump start on that next week with a resolution that, among other things, forces people fired for cause to take appeals to circuit courts, instead of the commission. But much of the overhaul effort will come after a Legislative Audit Council review of the agency is completed early this year.