Politics & Government

5 myths of the SC gas-tax debate

Potholes cause major damage to South Carolina drivers

Rep. Gary Simrill and Rep. Todd Rutherford discuss the damage potholes cause to drivers in South Carolina and the need for road repairs in the state.
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Rep. Gary Simrill and Rep. Todd Rutherford discuss the damage potholes cause to drivers in South Carolina and the need for road repairs in the state.

For three years in a row, S.C. lawmakers have been weighing whether to raise the state’s 16.75-cent-a-gallon gas tax to help pay to repair the state’s crumbling roads.

The debate, largely in the S.C. Senate, has centered on three issues.

▪ Whether there really is a need to increase the gas-tax and other driving fees

▪ Whether to change the structure of the state Transportation Department to make it more accountable and efficient

▪ Whether a gas-tax hike should be offset with a tax cut

Time and again, that debate has featured — er, um ... what shall we call them? — alternative “facts.”

As senators continued to debate Thursday, here is a look at five myths that have emerged:

1. There’s enough money already to fix our roads

The state Transportation Department has said many times it needs, on top of its current budget, an additional $1 billion each year to get S.C. roads in good condition.

Most S.C. lawmakers — including 97 of 120 members of the overwhelmingly anti-tax Republican House — and leaders agree.

However, a few — including S.C. Gov. Henry McMaster — have said that existing transportation dollars need to be spent more wisely.

The state’s gas tax now raises roughly $600 million a year. But, anti-tax critics note, not all that money goes to maintain the state’s roads.

“If all $600 million raised by our current gas tax had been going to our roads instead of being diverted to other government functions, we would not need to find more money,” Gov. McMaster has said.

So where does the money go?

▪ $167 million is sent to other entities, including county road committees and the State Infrastructure Bank, which spend that money on roads. However, in the past, the Infrastructure Bank controversially has spent money on new roads, not to maintain existing ones. But, last year, legislators clipped the bank’s wings. It no longer operates independently but funds projects at the request of the Transportation Department.

▪ Also included in that $167 million is about $45 million spent on non-road-related functions, including the state’s Natural Resources and Agriculture departments. That money, clearly, could be returned to roads — at the expense of Natural Resources and Agriculture.

In addition, $139 million of the state’s gas tax money to pay the Transportation Department maintenance workers.

But, unless the roads are going to fix themselves, someone will have to be paid to do that work, state Sen. Sean Bennett, R-Dorchester, said Wednesday.

Making a comparison, Bennett said he recently spent about $1,300 to replace his truck's alternator, battery and get an oil change. Part of his bill included roughly $500 for labor, he said.

Overall, the Transportation Department expects to spend $2.1 billion on road repairs — half from the federal government — during the state’s fiscal year that begins July 1.

▪ $1 billion will go to maintain and preserve some of the state’s 40,000 miles of roads

▪ Another $779 million will go to improve road capacity and operations, including widening roads

However, that spending does not keep up with the state’s deteriorating roads. Eighty-one percent of the pavement on the state’s most-traveled primary roads is in poor or fair condition, up from 74 percent in 2008.

2. The governor doesn’t control the Transportation Department

Some gas-tax opponents want the S.C. governor to have more control over the state Transportation Department.

Those who support making the Transportation Department a cabinet agency argue the governor, who is elected statewide, will be held accountable at the ballot box for poor roads.

However, thanks to a legislative change made last year, the governor already controls the roads agency, appointing all eight commissioners that oversee the department.

But critics object those appointments are subject to the confirmation of local legislators from South Carolina’s seven congressional districts. That, says State Sen. Tom Davis, R-Beaufort, makes it it too easy for legislators to reject the governor’s appointees. While that has never happened, the potential of a legislative veto means governor does not have full control of the agency.

Other legislators, including Democrats, say the idea that giving the governor direct control of a state agency results in more efficient, accountable government is laughable. Cabinet agencies that report directly to the governor — from Corrections to Juvenile Justice to Revenue to Social Services — have failed spectacularly in recent years, and no governor has been held accountable.

3. Transportation’s budget already has doubled

Anti-tax senators say the Transportation Department’s budget has nearly doubled — to $1.8 billion this year from $1 billion in 2009-10. They ask: How much more money does it take to pave a road?

Those numbers are misleading.

The Transportation Department’s $1 billion budget came in the wake of the Great Recession. Before the recession, the department’s budget was larger. In 2006-07, for example, it was $1.3 billion. Subsequently, it was cut as the U.S. economy was reeling.

Critics, including Sen. Davis, now cite recent growth in the Transportation Department’s budget, saying it is up from $1.3 billion just three years ago.

4. Borrowing for repairs is the answer

Last year, S.C. lawmakers approved borrowing roughly $200 million a year for a decade to pay for road repairs.

That borrowed money will pay for long-lasting projects — replacing roughly 400 bridges, for example.

Borrowing to pay for short-term needs — repaving a road or patching a pothole — is not fiscally sound, most lawmakers say. That’s because the pothole could re-emerge or the road could need to be repaved before the state has paid off the money borrowed.

“It’s financially irresponsible because you’re paying back a year’s worth of solution over 20 years,” said S.C. House Majority Leader Gary Simrill, R-York.

Undeterred, Gov. McMaster has urged lawmakers to borrow up to $1 billion more for road repairs.

5. A gas-tax hike should be offset by cutting the 7% income tax

Former S.C. Gov. Nikki Haley introduced the idea of offsetting a gas-tax increase with an income-tax cut in 2015, saying the state’s top income tax rate — 7 percent — is too high.

However, the state’s effective tax rate — after deductions and credits — is 2.99 percent, according to the Revenue and Fiscal Affairs office.

“We have given a lot of tax breaks, so you’re not really paying the 7 percent,” said House budget panel chairman Rep. Brian White, R-Anderson.

In addition, Democratic senators oppose pairing tax cuts with the bill.

The road-repair proposal “is being highjacked by people who are more concerned about cutting what are already low income taxes,” said state Sen. Vincent Sheheen, D-Kershaw.

Cassie Cope: 803-771-8657, @cassielcope