COLUMBIA, S.C. (AP) — House Speaker Bobby Harrell said Thursday he expects South Carolina to be sued over a panel's decision to disregard the state budget and increase employees' health insurance costs anyway. And he expects the state to lose.
Harrell, R-Charleston, said the Budget and Control Board likely lacked the authority to split the cost of premium hikes between workers and employers after the Legislature passed a budget that fully funded the increases.
"I'm not angry, just frustrated by the action," he said, adding that defending an expected class-action lawsuit will just cost the state more money.
Gov. Nikki Haley, chairman of the five-member board, convinced a majority on Wednesday to buck the budget in approving rates to take effect Jan. 1. It's believed to be an unprecedented override for what has previously been a procedural vote. State law requires the board's approval by mid-August to prepare for open enrollment in October, when employees can make changes to their health plans for the coming year.
The 3-2 vote means rates will increase 4.6 percent for both workers — past and present — and employers, which include state agencies, school districts and public colleges. The state health plan covers 415,310 residents: public employees, retirees and their spouses and children.
It would mark the second consecutive year of split increases. Last January, rates increased 4.5 percent for both employers and workers — employees' first increase in years. Agencies' contributions increased by 10 percent in both 2008 and 2011.
If the board had followed the budget, bearing the full cost would have cost employers 6.4 percent more starting Jan. 1. The budget distributed the necessary $20.6 million to agencies and schools to cover that, but the vote means only $14.8 million of that is needed. Haley said that surplus should sit in state coffers to become part of 2013-14 budget decisions.
Senate President Pro Tem John Courson, R-Columbia, was among senators Thursday calling on the board to reconvene and reverse what they called a violation of the law.
But Haley's office made clear she won't reconsider.
"All we are asking for is fairness — a shared expense by state employees and taxpayers," Haley spokesman Rob Godfrey said. "We will always fight for state employees, but we believe they'll understand that it's not right for the taxpayers to pick up the increased cost of their health insurance."
Democratic Sens. Darrell Jackson and Joel Lourie, both from Columbia, said Haley's move amounts to a back-door veto. They noted Haley could have used her line-item veto power as part of the budget process, but she didn't touch that issue.
Legislators agreed in the 2012-13 budget to fully fund the premium hikes to ensure workers noticed an increase in their take-home pay following four years without a raise. The approved budget provided 3 percent raises for most state employees — 5 percent for state law enforcement officers — while requiring, as part of a new pension reform law, that employees contribute an additional 1.5 percent of their salary toward their retirement.
Covering health care increases was part of the larger compromise on worker pay.
"We felt it was interlocked," Courson said.
In her executive budget proposal, Haley provided no raises to public workers and split the cost of the health care premium increases.
But when Haley didn't veto those items in the Legislature's budget, Courson said, "we assumed everything was fine."
The board's dissenting votes came from the panel's two legislative leaders.
"I'll never vote to undo what the General Assembly did," said Senate Finance Chairman Hugh Leatherman, a board member. "I think it's mandated to be drawn down as the General Assembly provided in the appropriation bill. I don't think we or anyone else has the authority to go behind the General Assembly."
Haley repeatedly said Wednesday that workers should have "some skin in the game."
House Minority Leader Harry Ott said they do, after years with no raise, furloughs that reduced their salaries and layoffs that increased their workloads.
"She continues her total disregard for state workers and teachers," said Ott, D-St. Matthews.
He noted the move is not going to help the Republican governor's already contentious relationship with the Republican-controlled Legislature.
"She's now clearly said I don't care what the General Assembly did. I don't care what's in their budget. I'm going to undo it," he said. "At some point, she's got to understand she's the governor and not a candidate for some other office, and work with the General Assembly."
On average, agencies will pay an extra $19 monthly, while employees and retirees will pay $7 more. Specific amounts by plan are not yet determined.
Currently, employees' contributions for the standard health plan range from $98 monthly for a single, non-smoker to $367 monthly for full family coverage with a smoker in the household. Employers pay between $292 for single workers to $724 for full families.