State lawmakers near agreement on issues holding up $7.4B budget

COLUMBIA -- House and Senate lawmakers are nearing an agreement that would cut $221 million in income and grocery sales taxes beginning in November this year.

The agreement is the final domino in a string of issues that have held up approval of the $7.4 billion state budget and forced lawmakers to return to Columbia on Tuesday, two weeks after the scheduled end of the session.

The proposal would speed up the Senate's phase-out of the grocery tax, eliminating the remaining 3 percent tax beginning Nov. 1 and saving residents $135 million next year. Over the course of a full July-to-June budget year, state residents would save an estimated $200 million.

South Carolina would join 30 other states and the District of Columbia, which do not tax groceries.

In exchange for increasing the amount of grocery tax relief, the House would accept the Senate income tax plan. That plan applies the tax cuts to the bottom bracket, saving all state income taxpayers an estimated $67.50.

The House had asked that tax cuts be applied to the top bracket first, saving a handful of the highest taxpayers thousands while the average taxpayer saved $31.

"Let's see what kind of pulse I get out of the House," said Ways and Means chairman Dan Cooper, R-Anderson. "I think we'll get it put together in the morning."

House and Senate negotiators could approve the deal at a scheduled meeting this morning.

"We're mighty close," said Senate Finance chairman Hugh Leatherman, R-Florence. "I feel confident."

Cooper proposed instituting both versions of the income tax cuts, while negotiators also mulled raising the threshold for each tax bracket according to inflation.

Leatherman said he could not support implementing both income taxes, while Cooper said he had no interest in the second option.

Last of disputes

The dispute over income taxes is the last of three issues House leaders wanted solved this year before they could approve the budget.

Tuesday, the Senate approved compromises on two others -- changes to the state's workers' compensation system and a bill reforming the state Transportation Department.

The House, said Speaker Bobby Harrell, R-Charleston, would vote on the compromises early today.

Lawmakers have sniped at each other for weeks, complaining that the other side was stalling, obstinate or opposing change.

But that acrimony disappeared quickly this week, as lawmakers have ticked off their to-do list beginning with Transportation Department reform Monday night.

The budget has been shelved for two weeks, and Leatherman said the House and Senate could move quickly to give it final approval and end worries about delayed pay raises for state employees, school funding increases and new health-care initiatives.

"We've got to settle this ... reach an agreement," Leatherman said. "I think the budget is basically done."