Cindi Ross Scoppe

August 5, 2014

Scoppe: There’s no free lunch, and no painless road fix

DEMOCRATS spent this entire legislative session mocking Gov. Nikki Haley’s proposal to tackle our frightening and growing road problem using funds from a magical “money tree.”

DEMOCRATS spent this entire legislative session mocking Gov. Nikki Haley’s proposal to tackle our frightening and growing road problem using funds from a magical “money tree.”

Then last month, their candidate for governor proposed … to do the same thing.

Sen. Vincent Sheheen was smarter than to use language so given to parody, and the details are different, but his proposal to divert all of the state’s annual revenue growth to road and bridge repair is of a piece with and no more realistic than the governor’s plan. If he’s serious about it, it’s even more irresponsible than hers.

With apologies to Abraham Lincoln — who probably didn’t actually utter that quip about fools, and who’s dead anyway — it might just be better to remain silent and let people think you don’t really have a plan to fix our roads than to speak up and remove all doubt.

Technically, Sen. Sheheen has a plan. And Gov. Haley says she has a new plan, although she won’t reveal it until after the election. Unless she’s playing with semantics, her no-new-tax pledge leaves her no place to go besides where Sen. Sheheen has gone.

That’s because once you decide to take on the state’s $29 billion infrastructure backlog, you have only two options: Raise taxes or starve government.

I suspect that if the Republican-controlled House and the Republican-controlled Senate were to send a bill to a Gov. Sheheen to raise the gas tax, he would treat it the same way Gov. Carroll Campbell treated the Legislature’s last gas-tax increase, a quarter century ago: Sign it into law. Of course, we have no idea whether the Legislature would do such a thing, because most lawmakers who support a gas-tax increase say there’s no reason to even try it as long as we have a governor who is promising a veto.

But candidate Sheheen isn’t proposing to raise the gas tax. He proposes instead to divert 5 percent of the state’s general fund and surplus revenue to the Transportation Department, and rely on unspecified new revenue, to reduce the backlog by about a third to a half.

He says he wouldn’t have to cut existing programs to do this because he would rely on the revenue growth that occurs every year as a result of inflation and population increases.

That’s certainly not a new approach. To anything.

It was the idea behind Gov. Haley’s smaller proposal to rely on the “money tree” — her term for the amount by which revenue projections are increased each year between the time she proposes her budget in January and the Legislature passes a budget in June — and it’s likely to be central to her secret plan.

‘New money’ illusion

In fact, relying on revenue growth, or “new money,” has been the basis of pretty much every plan our state’s leaders have put forward in the past two decades to create new programs or cut taxes. And it can sort of work. On a small scale. Or a one-time basis.

But we have neglected our roads and bridges for so long that putting a serious dent in the infrastructure backlog is neither a small-scale nor a one-time task.

Consider: The state’s general fund budget — the budget that the Legislature controls — is about $7 billion a year. The most conservative estimates are that the state needs to spend an additional $1 billion per year, for the next 20 years, to bring our roads and bridges up to adequate; the Transportation Department puts that figure at about $1.5 billion per year.

Revenue growth has averaged $120 million per year over the past decade, and has averaged at most about $160 million per year for the past 20, 25 and 30 years. As for Mr. Sheheen’s idea of using revenue growth to divert 5 percent of the general fund to highways, well, you simply can’t get there from here: General fund revenue was projected to grow by 1.2 percent this year, and 2.9 percent next year. It grew an average of by just 1 percent per year over the past decade, and 2.7 percent per year over the past two decades.

Most lawmakers acknowledge there’s a huge gap between what’s available to spend and what’s necessary; they argue that budgeting isn’t an all-or-nothing game, that it’s better to make some progress than no progress. And they are absolutely right about that.

What they don’t acknowledge is the cost of diverting all new revenue — or even most new revenue — to roads and bridges.

If S.C. were a person

If you think of our government like an individual, “revenue growth” is akin to the cost-of-living raise a lot of people get every year: If you’ve already made all the big purchases you need to make and you don’t have any big emergencies, it’s enough to get you by. It’s enough to let you keep buying groceries and paying the utility bills and buying gas as inflation increases the price of all of those necessities; it might even be enough to get you through that emergency root canal that your insurance doesn’t cover and buy a new clothes dryer when yours goes kaput.

But if you set aside all of the cost-of-living raise to pay for a new roof, then you might have to do without the root canal, and when the dryer conks out, you’re just going to have to make your neighbors mad by hanging your unmentionables out on a line in the backyard. Even without emergencies, you’ll still have to scale back your lifestyle, because you won’t have any way to keep up as inflation leads to higher grocery and gas and utility prices.

Only it’s worse than that, because you have to send your entire pay raise to the roofer every year. For 20 years. And at the end of 20 years, you’ll need to keep doing the same thing, because you’ve only spent enough to re-roof the front half of the house.

The consequences

If our Legislature had decided last year to divert all the state’s revenue growth to infrastructure, it couldn’t have paid for Gov. Haley’s landmark plan to focus intensely on reading in the early grades and to help supply the hardware and training to integrate modern technology into classrooms. It couldn’t have paid for Sen. Sheheen’s plan to provide 4-year-old kindergarten to more poor children.

If our Legislature had decided two years ago to divert all the revenue growth to infrastructure, it couldn’t have paid for credit monitoring for South Carolinians whose Social Security numbers and other sensitive financial data were stolen from Gov. Haley’s Revenue Department. Or for the first year of Sen. Sheheen’s 4K expansion.

If our Legislature decided next year to divert all the revenue growth to infrastructure, it wouldn’t be able to hire those 200 caseworkers that the Department of Social Services says it needs — and Gov. Haley says she supports — to get staffing up to pre-recession levels, and maybe keep a few kids from being killed by their parents.

And just as with the individual, it’s not merely a case of being unable to do anything new. Diverting all the revenue growth to roads and bridges means there’s no money to cover inflation — much less population growth.

We wouldn’t just be unable to hire those additional case workers; we’d have to further reduce the number we have, even as the number of families who need DSS supervision grows. We wouldn’t just be unable to expand 4K and hire reading specialists; we’d have to lay off teachers, even as the number of students increases.

No, you don’t necessarily have to cut government programs if you divert all the new revenue — for one year. But by year two, you have to start making some cuts. By year 20, well, you probably don’t want to think about how big those cuts would be. And you’d still have half the job left undone.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571. Follow her on Twitter @CindiScoppe.

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