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SC House Ways and Means crafting budget plan

Seanna Adcox, Associated Press

COLUMBIA, S.C. (AP) -- The House budget-writing committee voted Tuesday to shift some sales tax money toward road construction and make South Carolina Gov. Nikki Haley's office cover the cost of some contracts she signed with companies in response to last fall's cyber-attack on the state tax agency.

The Republican-controlled committee also refused to expand Medicaid to more poor adults for the coming fiscal year, as that part of the federal health care law takes effect in January. Democrats didn't push the issue, knowing they didn't have the votes, but hinted at the big debate to come once the budget hits the floor next month.

The Ways and Means Committee is putting together a budget for the fiscal year that starts July 1. Meetings will continue through the week as members craft an overall plan from separate sections handled by subcommittees.

Haley proposed a $6.3 billion spending plan for state taxes in her executive budget. The House has more money to work with.

The state's Board of Economic Advisors said Friday the state will collect nearly $120 million more this fiscal year than initially expected. Haley wants legislators to use $26 million of that additional money to cut income taxes — saving taxpayers less than $30 on average — and the rest for road and bridge repair.

The Department of Transportation says it needs an additional $1.5 billion annually over the next 20 years just to bring roads into good condition.

On Tuesday, the Ways and Means Committee advanced a bill that would eventually shift more than $80 million yearly from the general fund to DOT. The transfer would be phased in over two years, meaning $41 million would go toward fixing roads in the coming year.

The money would come from the state sales tax on vehicles, which is capped at $300.

Rep. Gilda Cobb-Hunter, D-Orangeburg, voted against the idea, saying she wants money for infrastructure, but not by taking money from other needs.

"For years now, we've made extreme cuts to government," she said. "It's important we look at the needs we've been neglecting."

GOP Rep. B.R. Skelton supported the measure, but said it does nothing to truly solve the state's crumbling infrastructure. He wants to increase the state's 16.5-cents-per-gallon tax on fuel — unchanged since 1987 — by 10 cents, and temporarily give residents a rebate to cover their added costs.

"We allow tourists and truckers to get off scot-free," Skelton, R-Six Mile, said about the bill. "Perhaps we'll wait until a bridge collapses with a school bus on it to get our attention to really attack the issue."

But he acknowledged his proposal has no chance of passing.

Another bill advanced by the committee would again suspend a 1991 law requiring that local governments receive 4.5 percent of the previous year's state tax collections.

Legislators have not followed that law since 2008, when the local government fund reached $280 million.

A House panel is studying how to change the law to better reflect current economic conditions.

Rep. Harry Ott, D-St. Matthews, said the state needs to fulfill its obligations. But Rep. Jim Merrill, who chairs the study panel, said it makes no sense to mandate a percentage based on past revenues rather than future projections.

The study panel is also reviewing how much it would take to cover local governments' expenses that state law requires. Exactly what's considered a state mandate is under debate.

"It's just silly to go back and do it the way it was before," said Merrill, R-Charleston. "Let's budget in a manner that doesn't put us in a hole."

A clause approved by the committee would require Haley's office to cover $500,000 in contracts she signed in response to last fall's cyber-attack in which in the personal data of 6.4 million residents and businesses was stolen from the state's tax collection agency.

The Budget and Control Board, which Haley chairs, approved a $20 million loan from insurance reserves in December to cover contracts she and former Revenue Director Jim Etter approved after learning of the hacking in October.

The clause would require the governor's budget to reimburse $300,000 paid to attorneys and $200,000 to a public relations firm.

"They should take ownership of those expenditures," Merrill said.

Though the clause also says her office would have to cover "consulting," Merrill said it's not intended to refer to the $750,000 paid to computer security firm Mandiant.