Published Online: January 12, 2009

S.C. Gov Would Cut School Money, Add to Medicaid

South Carolina Gov. Mark Sanford unveiled a $5.8 billion budget proposal Friday that would put money back into some subsidized health care programs that have seen severe cuts but also cut millions from education spending, furlough state workers for two days and require that retirees pay higher health insurance premiums.

The spending proposal for the next budget comes as $1 billion in cuts this fiscal year strip government aid for programs such as hospice care and meal delivery, and carve deeply into public schools and colleges. Slumping tax collections have shrunken South Carolina's state budget to $6.1 billion from more than $7 billion approved last year.

Sanford's budget recommendations to fellow Republicans, with whom he frequently disagrees, come days before legislators formally return to Columbia to continue working on their own spending plans for the fiscal year starting July 1.

In his proposal, the governor cuts every state agency budget but does offer some relief on the health care front. He would restore $137 million taken from Medicaid programs for the state's poor, disabled and elderly to balance the current year's budget.

But he did impose a new, not-yet-defined cap on enrolling children for Medicaid health care. Four in ten South Carolina children get Medicaid benefits and Sanford wants the number of new slots limited, for a cut of $14.3 million.

Advocates for the state's poor said such a cap would be a mistake because the program is determined through household income, but they did laud Sanford for restoring some health care spending.

"I think that is great," said Sue Berkowitz, executive director of the low-income advocacy group South Carolina Appleseed Legal Justice Center. She hadn't seen details and said she was worries Sanford may have cut other critical social service programs.

The governor's largest single source of savings would come from public schools and colleges.

Sanford wants nearly $40 million cut from Education Department and public school spending by, among other things, laying off agency workers, consolidating districts and not buying textbooks.

Meanwhile colleges would lose $32 million in a plan to consolidate two- and four-year college administration. He also would close three University of South Carolina campuses in Allendale, Lancaster and Union.

'Toughest Budget Ever'

Sanford, in the second-to-last year of his second term, called it his toughest budget ever and blamed legislators for ignoring his calls to restrain spending and streamline government since he took office in 2003.

"We have laid out a roadmap over those six years that would have avoided the incredibly tough decisions that are built into this budget. If we had stayed on that roadmap, we would not be making these choices," Sanford said.

That meant a choice between spending cuts and raising taxes to balance the plan.

Sanford wants taxes cut and repeated a proposal made last month to eliminate corporate income taxes by nixing some business tax breaks. And he called for raising the state's cigarette tax — the nation's lowest at 7 cents — to 37 cents. He'd use the money from that to create an optional flat tax system that would allow people to pay a 3.6 percent rate with no deductions, or continue paying the state's top rate of 7 percent but with deductions.

That cigarette tax proposal appears to be a nonstarter with legislators, who insist any money from that go into providing health care through the Medicaid program or private insurance incentives.

Sanford's spending decisions would hit state employees and retirees. For instance, Sanford called for a two-day furlough of state workers that would save $10 million. His proposal calls for those unpaid days to be taken during state holidays.

Sanford also said the state can save about $63 million yearly by requiring retirees to cover more of their health care costs. Sanford said the typical retiree would pay about $83 more monthly. The money would carve more than $2.5 billion from the health plans' long-term liabilities.

The governor said other states pay far less for retiree health care, but advocates said the change would be a mistake.

"Well, that's going to be very hard on many retirees," said Sam Griswold, president of the South Carolina State Retirees Association.

The governor also would have the state save $16.4 million by requiring more use of generic drugs in its health programs.

Vol. 28

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