South Carolina’s Haley Pushes Tax Cuts Despite Budget Shortfall

By: - December 27, 2010 12:00 am

South Carolina Governor-elect Nikki Haley wants to eliminate her state’s corporate income tax now and the personal income tax later, the Greenville News reports . As she tries to shrink South Carolina government, Haley also is pushing for new limits on what the state can spend, in a proposal that would refund any extra revenue back to the public. For now, though, South Carolina doesn’t have extra revenue. It faces an $800 million budget shortfall in the upcoming fiscal year, plus serious deficits in the current fiscal year including a hole in the Medicaid budget that could end payments to providers in March if nothing is done. That’s why the incoming Republican governor plans to push for eliminating only the corporate income tax-a smaller source of revenue than the personal income tax-as a first step. “This is the perfect time to go back and look at the core functions of government,” Haley said. Other priorities of the new governor include privatizing the state’s school bus fleet and requiring recorded votes in the state legislature.

Iowa Governor-elect Terry Branstad didn’t want Iowa’s public workers to agree to a new labor contract before he takes office, but 98 percent of his state’s members of the American Federation of State, County and Municipal Employees decided to defy him. The new deal, negotiated with outgoing Democratic Governor Chet Culver, gives the 13,000 members of Iowa’s largest public employee union a six percent raise, which will be phased in through January 1, 2013. Branstad, a Republican, has said the pay hikes will cost the state too much money. He can’t force the union to renegotiate the contract, but he could threaten job cuts as a way to draw AFSCME back to the bargaining table, the Des Moines Register reports . Branstad plans to make some sort of reassessment of the deal a key goal once he takes office.

Under Governor-elect Rick Scott , Florida ‘s Office of Drug Control is likely to disappear. According to the Miami Herald , Scott’s staff has told the four employees of the office that they’re being let go. The functions of the office are likely to move to other agencies. “I don’t think we’re going to have cocaine bales stacking up on the docks of Miami if we close this office,” a Scott spokesman said. Still, some lawmakers are worried that the state will be less focused on fighting illegal drugs without staff who report directly to the governor on the issue. The Office of Drug Control was created in 1999 under Governor Jeb Bush. 

The freshmen Republicans in the New Mexico House of Representatives aren’t committing to form a coalition with Democrats to elect a more conservative speaker, the Santa Fe New Mexican reports . In the November elections, Republicans narrowed Democrats’ advantage in the New Mexico House from 45-25 to 37-33. After the election, Ben Luján , who’s been speaker since 2001, won a Democratic caucus vote against Rep. Joe Cervantes , a more conservative Democratic alternative. The narrowness of the Democratic majority has prompted speculation that Republicans could unite with a couple of Democratic renegades to select Cervantes as speaker when the full House votes January 18. For now, the situation appears still to be in flux.

In Michigan , Governor-elect  Rick Snyder is keeping Jennifer Granholm’s director of the Department of Transportation. Kirk Steudle is a longtime MDOT veteran whom Granholm named to the job in 2006, the Detroit News notes . The move is the latest sign of continuity between the incoming Republican governor and the outgoing Democrat. Earlier, Snyder and Granholm jointly agreed on new appointments to the Michigan Economic Development Corporation. 

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Josh Goodman

Josh Goodman helps lead research on fiscal management and place-based economic development programs as part of Pew’s state fiscal health project. Goodman has served as a primary author for Pew studies that examine how states should evaluate tax incentives and maintain budget discipline when implementing those incentives.