South Carolina’s Transportation Needs

South Carolina is not alone in having inadequate and dilapidated highways and bridges; this is a national problem. The “road” to getting additional funding for South Carolina’s transportation system will be a bumpy ride!! Two plans were introduced in the S.C. House of Representatives yesterday. The Governor’s plan would add 10 cents to the existing gas tax over three years, while decreasing the income tax rate by 30% over 10 years. The Governor’s plan, as introduced, is politically dead and she knew that when she unveiled it. Getting the legislature to cut 1.7 billion dollars from a 7 billion dollar budget is not realistic. The third part of her plan would give her complete control over the Transportation Department. The General Assembly may give that power to her … and she may regret it. Currently, she can blame the congested traffic and bumpy roads on the Legislature – not so if it becomes a cabinet agency.

The House has its own bi-partisan plan created by an ad-hoc committee appointed by Speaker Lucas. Their plan makes no mention of an income tax reduction. It has a more complex (some say unnecessarily complicated) formula for figuring taxes on fuel. It cuts the current gas tax per gallon and adds the state sales tax (now exempted) to gasoline at the wholesale level. This allows legislators to say they voted to “cut” the gas tax and to “close” a sales tax exemption. The problem with this is it makes the revenues less certain in the future, as predicting the price of gasoline a year or more out is highly speculative. A straight-up gas tax brings in a very predictable amount and allows for better planning on what road improvements can be made. The House plan also increases the sales tax cap on automobile and truck purchases from $300 to $500. There are other fee increases included.

There will likely be hundreds of amendments to these bills as they go through the committee and floor debate process. Everyone has at least some nuance they would like included in the plan. The big question will be if anything can get a majority vote. Raising a tax of any sort in South Carolina is no easy task. It is very possible that no plan can receive the backing of the House, the Senate and the Governor. With so many ideas in motion, everyone will be able to say they voted for something to make highway improvements. Ultimately, the Speaker is going to have to step forward and push through whatever compromise he can muster. The Senate is hamstrung until the House sends them a bill. Raising a tax, which impacts more than 50% of South Carolinians, has to start in the House. Once the Senate receives a House bill, the Senate can then make whatever amendments it likes.

In the backdrop to these discussions are those pushing for “more efficiency” at the SC DOT. That is a good idea; every agency can and should improve. The reality is, there is no way to widen Interstates 20, 26, 85 and 95 without increasing designated revenues to those projects. The Legislature and the Governor have to step up and act.

South Carolina Highway Facts:

South Carolina has over 825 miles of Interstate

If a person drives 15,000 miles a year and gets 20 miles per gallon, he/she will pay $120 in SC motor fuel user fees annually. This is enough to resurface about 7 feet of one laneon the average secondary road.

South Carolina has the 4th largest state-maintained highway system in the nation.Nationally, only 19% of all highways are under state ownership. In South Carolina, 63% of all highways are under state ownership.

South Carolina taxpayers contribute 43% less annual state source revenue per capita ($152) than the national per capita average ($267). For every dollar the average American contributes in recurring state-source highway dollars, the average South Carolinian contributes 57 cents. The term “recurring” means user fees, not bonds (which are repaid with recurring revenue).

The state motor fuel user fee has been 16¢ per gallon since 1987. This is the 4th lowest in the nation. It has remained flat while the Consumer Price Index has grown 105% and traffic has grown 51%.