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Some states raising fuel taxes for roads while SC waits

By the time South Carolina business leaders sent a letter in April to lawmakers urging them to do something about the state's deteriorating roads and bridges, Georgia's legislature already had passed a bill to raise about $900 million more for that state's transportation needs.

In March, while South Carolina House leaders struggled to figure out which roads plan to pursue, the Utah Legislature passed a bill to increase the state gas tax there by 5 cents per gallon, create a 12 percent tax on the wholesale price of gas and allow counties to seek voter approval for local sales tax to fund transportation projects.

And in June, while South Carolina lawmakers debated the budget and removal of the Confederate battle flag from the Statehouse grounds, House and Senate leaders in Washington state reached agreement on a $16 billion road-funding package that includes an incremental 11.9 cent-per-gallon increase in the state's gas tax.

According to the American Road & Transportation Builders Association and FleetOwner.com, which each have tracked what states have done to raise money for infrastructure, at least 15 states have raised taxes or fees since 2013 for transportation needs.

Another six states have advanced measures to borrow millions for road needs.

The South Carolina House in April passed a bill that would raise more than $300 million for roads, offer a carrot for counties to take some roads from the state inventory and include some income tax relief. But the Senate tied itself in knots on the issue and passed nothing by adjournment.

It was the second year senators talked of road funding but passed nothing.

"Every state has come to the realization that infrastructure needs far outweigh the money that's there to pay for it," said Rep. Gary Simrill, a Rock Hill Republican who led the House effort to fund roads. "I really think if you look around the country, our plan, with the reform components and the fee component, is probably one of the best that is out there. Unfortunately, the Senate did not see the same thing."

Sen. Ray Cleary, a Georgetown County Republican who has for years pushed for road funding, said he thinks other states that have passed transportation funding plans have showcased cooperation by their governor, House and Senate leaders.

"My personal feeling is we don't have that," he said of the cooperation. "But we may have it if you couple it with a major tax decrease."

Gov. Nikki Haley has threatened to veto any road funding plan that does not include a significant cut in the state income tax.

Dave Schwartz, director of the South Carolina chapter of Americans for Prosperity, a group that campaigned this year against any increase in South Carolina's gas tax, said the state's leaders can learn from good ideas used to fund transportation needs in other states.

He said he knows proponents of raising the gas tax in South Carolina are pointing to what other states have done and wondering why South Carolina can't follow their lead.

"We're different," he said of the state. "We've got different solutions on the table. I don't think at the end of the day, just because Georgia passed a gas tax hike, that South Carolina is going to pass a gas tax hike."

Georgia's passage of a transportation funding package came three years after a very public failure.

Following a transportation study, voters went to the polls in 2012 to decide whether to approve a one-penny sales tax for transportation projects in each region.

Out of 12 regions, only three passed the tax.

Seth Millican, director of the Georgia Transportation Alliance, said some of the project lists were not right, the economy was still suffering from the Great Recession and the TEA Party was at the height of its influence in Georgia.

It was kind of a death by a thousand cuts

Seth Millican, director of the Georgia Transportation Alliance

Road-funding proponents regrouped, another study committee was formed and transportation problems worsened, he said.

While South Carolina lawmakers argued Georgia's roads were superior to those in the Palmetto state, Georgia officials argued their system was deteriorating.

The new study committee found the state needed $1 billion to $1.5 billion more per year just to keep the system in its current condition.

Gov. Nathan Deal argued the state needed to increase the small percentage of roads being resurfaced each year.

"We are currently operating at a rate that requires over 50 years to resurface every state road in Georgia," he said during his State of the State speech. "If your road is paved when you graduate high school, by the time it is paved again you will be eligible for Social Security. "

The study committee held regional public hearings, then issued a report on the state's needs and possible funding options. The exact remedies were left to lawmakers to work out.

"What it was very clear on was that if we want to address the challenge of being overly dependent on the federal government, if we want to reverse this horrible maintenance cycle, we're going to have to have at least a billion dollars a year in additional funding," Millican said.

A coalition of business and government leaders was formed to push for increased funding. In Georgia, as in South Carolina, the Legislature is predominantly Republican, as is the governor. Legislative leaders, the governor and lieutenant governor worked to pass a road-funding plan.

"They were intimately involved in the discussions from Day One," he said, "asking questions, gathering data, convening discussion groups. They were just very engaged in the process. I think the critical piece was the engagement and interest by our elected officials. They accepted the fact that it was going to be a tough decision. They accepted the fact that we were not going to leave the capitol without doing something about this and they delivered."

Citizens appeared to be in favor of increased funding as well, as demonstrated by the public hearings and a poll. The campaign to enact road funding focused on the economic good such a package could do, not just the state's bad road conditions.

Legislators in both chambers passed the road-funding plan in March. It recalculated the state's gas tax, removing a 4 percent sales tax and increasing the tax on gas to 26 cents per gallon, 29 cents per gallon for diesel. (South Carolina's gas tax is at 16.75 cents per gallon and has not been raised since 1987).

A $5,000 tax credit for electric vehicles was eliminated and a new annual fee of $200 created for non-commercial electric vehicles.

The legislation created a new highway impact fee for heavy trucks. It also restructured the Georgia Transportation Infrastructure Bank and created a $5-per-night hotel fee.

Millican said voters will pay more but also will see the results, which he said will be administered in a fiscally responsible way.

"I'm excited to see what the future holds for us," he said.

Georgia was one of seven states to raises taxes or fees for transportation in 2015. The others were:

▪ South Dakota, where lawmakers increased the state's motor fuels tax by 6 cents per gallon, to 28 cents; raised the excise tax on car sales by 1 point to 4 percent; increased license plate fees and allowed counties and townships to impose property taxes for local transportation projects.

▪ Utah, where lawmakers raised their state's gas tax by 5 cents per gallon to 29.5 cents, beginning in January. They also created a 12 percent excise tax on the wholesale price of gas that will replace the flat gas tax once the wholesale price reaches $2.45 per gallon, which lawmakers estimate will be another six to 10 years. Legislators also permitted counties to seek voter approval for a ¼ cent sales tax for local road projects.

▪ Idaho, where lawmakers increased their state's gas tax by 7 cents per gallon, raised vehicle registration fees and created a new fee for electric and hybrid cars. Legislators also voted to spend half of any revenue surplus for two years on transportation needs.

▪ Iowa, where legislators increased the gas tax by 10 cents per gallon; raised the jet fuel tax by 2 cents per gallon; created variable rates for ethanol-blended and diesel fuels; and increased permit fees for overweight, oversized loa

▪ Nebraska, where lawmakers overrode a governor's veto to raise the gas tax a total of 6 cents per gallon over four years, with proceeds to be split between state and local governments for transportation projects.

▪ Washington, where the governor last month approved a package of bills that could provide $16 billion in added funding for transportation needs. The package increases the state's gas tax by 11.9 cents per gallon over two years; raises General Fund appropriations for transportation; grants authority to sell $5.3 billion in bonds; increases transportation-related fees and allows voters in transit areas to approve higher taxes to generate $15 billion more for a light rail system.

Seven states have tried to pass road-funding plans but failed in the past two years, according to the American Road & Transportation Builders Association. Several others failed and then passed another plan.

Other states still are debating transportation plans.

In North Carolina, Gov. Pat McCrory has proposed a $2.85 billion bond package to fund 27 highway construction projects and 176 paving projects in 64 counties.

Jordan Marsh, associate director of the South Carolina Alliance To Fix Our Roads, said many of the states that have passed road funding packages are led by Republicans. He said it is in South Carolina's interest to pay attention to what its neighbors are doing with road funding since the state competes with them for business.

"We're falling behind," he said.

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