House OKs tax hike on smokes

South Carolina lawmakers are a step closer to increasing the state's cigarette tax for the first time in more than 30 years.

House lawmakers voted to keep a 30-cent per pack increase in a $5.1 billion state spending plan.

The state could not tap the money, an estimated $90 million, until July 1, 2011. It would have to be spent on health care. Supporters said the tax increase would help defray budget cuts when more than $1 billion in federal budget aid runs out.

"The tax ... would allow the state to take care of some of our health care needs next year when that freight train comes barreling at us," said House Minority Leader Harry Ott, D-Calhoun.

However, House lawmakers rejected larger increases, including a 50-cent increase they approved last year. That money would have provided subsidies for private employers or low-income workers to purchase health insurance.

Some lawmakers said a larger tax increase would put S.C. businesses at a disadvantage with competitors in North Carolina and Georgia.

Others opposed the tax increase completely and did not have an issue that South Carolina, at 7 cents a pack, has the lowest cigarette tax in the nation.

"I want to be the lowest taxes on everything," said Rep. Joey Millwood, R-Landrum, who warned lawmakers who signed a no-tax pledge that they would violate it with a vote for the budget. Millwood's amendment to remove the tax failed by a 106-12 vote.

The House also voted 69-43 to keep a $10 million loan offer designed to protect the Heritage golf tournament in Hilton Head in the state budget.

The loan would only be used if tournament organizers fail to find a sponsor for next year's event. Verizon will sponsor this year's tournament.

Supporters said the golf tournament is one of South Carolina's premier events, and according to a Clemson University study, supports 1,200 jobs and generates $87 million in economic activity.

"Can we afford to risk losing them?" asked Rep. Leon Stavrinakis, D-Charleston. "The answer is a resounding 'no.'"

Leading the charge to remove the loan were Rep. Nikki Haley, R-Lexington, a candidate for governor, and Rep. Ralph Norman, R-Rock Hill.

"This is not government's role to back a golf tournament," Norman said, noting the tournament boasts sponsors such as Coca-Cola, Grey Goose vodka and Anheuser-Busch's Michelob.

"This proviso scares me more than anything because I don't think that's our role."

At times the debate was heated, with lawmakers expressing frustration with Haley.

Though not her amendment, Haley has been involved in a number of extended debates during budget week. She later offered an amendment requiring a three-day wait before voting on a final House and Senate budget compromise, which was rejected.

The House also voted to keep a second, $15 million loan in the budget designed to entice low-cost air carriers to the state. S.C. airports tend to have higher fares than others, and lawmakers said more competition would lower airfares and make the state more attractive to business.

A number of low-cost carriers have expanded in S.C. only to eventually scale back or cut out the flights entirely.