SC Supreme Court: Increasing state workers’ insurance costs unconstitutional

abeam@thestate.comApril 24, 2013 

— In the tug-of-war over who controls state government, the S.C. Supreme Court sided with the state Legislature on Wednesday.

The court ruled the five-member State Budget and Control Board, led by Gov. Nikki Haley, was wrong last year to overrule the Legislature and increase health-insurance premiums for state workers.

The decision means the 255,000 state workers and retirees covered by the state health plan will not pay more for theirs and their families’ health insurance. Instead, S.C. taxpayers will pay $51 million to cover the cost of the increase.

“It’s a shame that taxpayers will have to foot the entire bill for increases in state employee health care costs,” Rob Godfrey, Haley’s spokesman, said in a news release. “Anywhere other than government, the costs would be shared, and we hope the Senate will do the right thing in their budget and split these costs evenly this year.”

After years of budget cuts, state lawmakers decided last year to give state workers a 3 percent raise, the first raise in four years. But lawmakers also increased state workers’ required contributions to the state retirement fund. That left lawmakers worrying that if they also increased health-insurance premiums, state workers’ 3 percent raises effectively would be wiped out.

Ultimately, lawmakers adopted a budget saying the state should pay 100 percent of that $51 million premium increase, and Haley signed that budget, which took effect July 1.

But in August, at a Budget and Control Board meeting, Haley surprised state workers by asking that board to vote to split the cost of the higher insurance premiums with state workers.

The budget board voted 3-2 in favor of that split, with State Treasurer Curtis Loftis and Comptroller General Richard Eckstrom joining Haley. The two legislative members of the budget board – Senate Finance Committee chairman Hugh Leatherman, R-Florence, and House Ways and Means chairman Brian White, R-Anderson – voted against the split.

The Supreme Court ruled Wednesday the budget board’s actions violated the separation-of-powers doctrine, which holds the three branches of state government – judicial, executive and legislative – should be “forever separate and distinct from each other,” according to the state Constitution.

“If the (budget) board could decline appropriated funds based on its own policy choices, it would have the unbridled power to disregard the General Assembly’s appropriations and make its own appropriations decisions,” Associate Justice Kaye G. Hearn wrote in the unanimous opinion.

Carlton Washington, executive director of the S.C. State Employees Association, said the court “made it clear that what the governor did was not appropriate.”

“I hope she will realize that and not try to operate in the dark and use backdoor tactics that are punitive to employees,” Washington said.

While state employees won this round, the cost of their health insurance still looms large. Their health plan needs an extra $85 million for the state’s budget year that starts July 1.

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