AASHTO Journal, 23 January 2015
Haley describes three-part highway funding and tax cut plan in her Jan. 21 State of the State speech.Courtesy South Carolina ETV
South Carolina Gov. Nikki Haley offered state legislators a “three-part package deal” in which she would back raising the state’s gasoline tax 10 cents a gallon over three years, if lawmakers would cut the income tax by nearly 30 percent and restructure the state Department of Transportation.
Haley, in a Jan. 21 State of the State address, said “deficient roads and highways are an economic issue” for South Carolina, and said she had already supported $1 billion in new road funding last year that was “the biggest infrastructure investment in a generation.”
However, she said that investment, and a budget proposal to put another $64 million into roads from vehicle sales taxes is “not enough. We still have very substantial infrastructure revenue needs that have to be addressed.”
But in a transcript carried by The State newspaper, Haley also said: “We have a very real problem with the way our transportation dollars are spent. Our system screams out for reform and restructuring. The condition of our roads and bridges is a statewide concern and yet our dollars are being spent with zero statewide perspective.
“The current system, with commissioners representing congressional districts and selected by local delegations, is the ultimate exercise in parochialism. Instead of fighting for the needs of South Carolina at large, they fight for the needs of their districts, which means they fight each other. I don’t necessarily blame them – until we make wholesale changes to the system, doing so is in their best interests.”
The governor flatly said she “will not support more revenue for our roads and bridges until we restructure the Department of Transportation.”
The same night as Haley’s speech, South Carolina Transportation Secretary Janet Oakley issued a statement saying the governor’s “three-step plan to make South Carolina roads a priority is a huge win for the state.”
Although Haley reiterated that she would “veto any straight-up increase in the gas tax,” she noted that South Carolina has the third-lowest gas tax in the nation and “gas prices are now down to their lowest level since 2009.” In addition, she said adjusting that tax would mean “non-South Carolinians who visit our state would pay a portion of the tax. And we would boost the revenue stream that is dedicated to improving our roads and highways.”
She described her package offer as a “win-win-win for South Carolina.”
That would involve cutting the state income tax rate from 7 percent now to 5 percent over the next decade, making it more competitive in a region where its neighboring states have lower rates or no income tax. Doing so “will be a massive draw for jobs and investment to come to our state,” she said.
“Next,” she said, “let’s change the way we spend our infrastructure dollars and get rid of the legislatively elected transportation commission so the condition of South Carolina’s roads is no longer driven by short-sighted regionalism and political horse trading, and we stop wasting our tax money.”
The third part of her package would be to hike the gas tax 10 cents a gallon over three years and “dedicate that money entirely toward improving our roads.” That would still leave South Carolina’s excise tax below both Georgia and North Carolina on either side. “And we can do it without harming our economy because when coupled with the 30 percent income tax cut, it still represents one of the largest tax cuts in South Carolina history,” Haley said.
But she cautioned that “I hope everyone listened carefully to what I said. This is a three-part package deal. In order to get my signature on any gas tax increase, we need to restructure the DOT, and we need to cut our state income tax by 2 percent. If we do all of those things, we will have better roads and a stronger economic engine for our people.”
Oakley, in her statement, also said: “I applaud the governor’s leadership in studying the state’s infrastructure problems and proposing a solution that will not simply be the burden of South Carolina taxpayers. Finally, I ask the General Assembly to work with the governor and pass her three-part plan so we can begin strengthening the state’s highways, roads, and bridges.”