The South Carolina House passed a bill Wednesday to pay to repair the state’s crumbling roads by increasing the state’s gas tax by 10 cents a gallon.
The proposal, which would raise roughly $427 million a year, passed 87-20, a large enough margin in the GOP-dominated House to survive a veto threat by Republican Gov. Nikki Haley.
State Rep. Gary Simrill, R-York, said the “strong vote” shows House members are serious about fixing S.C. roads.
The House proposal would:
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▪ Increase the state’s gas tax by the equivalent of 10 cents a gallon to 26.75 cents
▪ Increase the maximum state sales tax on vehicles to $500 from $300
▪ Cut the average S.C. taxpayer’s income taxes by $48 a year. Once phased-in after two years, that tax cut would reduce the state’s $6.9-billion-a-year general fund by roughly $50 million.
Haley took to Facebook on Wednesday evening saying she was stunned the House voted to “raise your taxes by $365 million” next year. She posted to her social media followers how House members voted. She has said she would veto a tax increase to repair roads that did not include a “massive” tax cut.
Haley has proposed a 10 cent-a-gallon gas-tax increase, to be phased in over three years, paired with a 2-percentage-point cut to the state’s top-end 7 percent income tax, to be phased in over 10 years.
She has said growth in state revenues would offset lost income tax revenue. But critics said her proposal would cut state spending on schools, law enforcement and health care by more than $1 billion a year when the tax cut was phased in completely.
The House proposal emerged from a special committee chaired by Rep. Gary Simrill, R-York. The plan has the backing of House leaders, including Speaker Jay Lucas, R-Darlington, and Ways and Means Committee Chairman Brian White, R-Anderson.
“Waiting to address this issue increases repair costs, discourages investment and jeopardizes the safety of South Carolina drivers,” Lucas said in a statement.
The tax hike in the bill – estimated to bring in $427 million a year for road repairs – is tied to the price of gas. So, Simrill said, if gas increases to $3 a gallon, the amount raised for roads could be closer to $600 million a year. The state Department of Transportation has estimated it needs up to $1.5 billion a year in additional money to repair, maintain and expand the state’s roads.
Three state representatives – including Rick Quinn and Todd Atwater, both Lexington Republicans – attempted to amend the House proposal to include a larger income tax cut, reducing to 5.75 percent the top rate over 10 years. Their proposal also included an option for county residents to vote to increase local gas taxes, in addition to the House gas tax increase.
However, that proposal was defeated 66-37 after White told House members they should “proceed with caution” when cutting taxes.
While the state’s revenues will increase, its expenses – including the cost of education, health insurance for state workers, assistance to local governments, new Social Services caseworkers and a new computer system – will go up as well, White said.
“As much as I would prefer to cut taxes and fix our roads, my priority at this point is fixing our roads,” said state Rep. Kirkman Finlay, R-Richland.
The House plan now goes to the GOP-majority state Senate, which has its own roads proposal. That proposal, which would raise $800 million a year for roads, would increase gas taxes by 12 cents a gallon but includes no income tax cut. However, it is stuck in limbo.
Simrill said he has talked to Senate President Pro Tem Hugh Leatherman, R-Florence, who indicated the Senate might be close to the House’s thinking. The York Republican also thinks Haley eventually will support the House plan.
The Associated Press contributed. Reach Cope at (803) 771-8657.
House roads plan
Money raised: Roughly $427 million a year
Tax hikes: Increase the gas tax by the equivalent of 10 cents a gallon, increase the maximum state sales tax on vehicles to $500 from $300
Tax cuts: Adjust the state’s income tax brackets, saving the average taxpayer $48 a year
Other highlights: The plan makes it optional for counties to take over control of local, less-traveled roads in return for getting more state gas-tax revenues