Politics & Government

McMaster vetoes gas tax, Legislature poised to override

Making good on his promise, Gov. Henry McMaster vetoed a proposal Tuesday to raise taxes and fees to pay to repair South Carolina’s crumbling roads.

However, both the S.C. House and Senate passed the plan by super-majorities, meaning they easily should override the Republican governor’s veto. They could do so as early as Wednesday.

The Transportation Department has estimated it needs an added $1 billion a year to repair S.C. roads and bridges.

After more than two years of debate, senators voted Monday – 32-12 – and state representatives voted Tuesday – 99-20 – to increase the state’s gas tax by 12 cents a gallon and increase other driving fees to provide about $630 million a year of that added money.

However, late Tuesday, McMaster vetoed the road repair bill, which also included tax cuts.

“If we would simply reform how DOT spends your tax dollars to be responsible and accountable, we’d have plenty of money – and this gas tax hike would be totally unnecessary,” McMaster said in a video veto message on his social media account.

The Richland Republican had waffled on whether a tax hike was needed to repair the state’s roads.

In February – shortly after succeeding Gov. Nikki Haley, who resigned to join the Trump administration – McMaster said increasing the state’s gas tax should be a “last resort.”

Later, McMaster said he opposed raising the gas tax, contending the state has enough money for road repairs but is misspending it. McMaster – who faces a battle in next year’s GOP gubernatorial primary, dominated by anti-tax voters – also urged lawmakers to borrow up to $1 billion for road repairs.

“Right now, over one-fourth of your gas-tax dollars are not used for road repairs,” McMaster said Tuesday. “They’re siphoned off for government agency overhead and programs that have nothing to do with roads.”

The state’s current 16.75-cents-a-gallon gas tax raises about $600 million a year, according to the Department of Transportation.

About a third of that money – $167 million – is sent to county road committees for local roads and the State Infrastructure Bank for new or expanded roads. Another $45 million is spent on non-road expenses, including money that goes to the state Natural Resources and Agriculture departments.

Leaders of the normally anti-tax General Assembly, dominated by Republicans, said they chose “good public policy over petty politics.”

“Our members knew the General Assembly could send a long-term, sustainable solution to the governor if legislators put good public policy over petty politics,” S.C. House Speaker Jay Lucas, R-Darlington, said in a statement.

S.C. House Majority Leader Gary Simrill, R-York, said the House, which will take up McMaster’s veto first, could consider overriding the governor as soon as Wednesday.

Last year, lawmakers approved spending roughly $200 million a year out of the state’s general fund budget to pay for borrowing projects to fix bridges and repair roads, including fixing Malfunction Junction in Richland and Lexington counties.

But lawmakers said that move was only a stopgap measure, adding it penalized South Carolinians because it used only state sales and income taxes to pay for roads.

In contrast, nearly a third of the higher gas taxes approved by legislators will be paid for by out-of-state travelers, pro-gas-tax legislators said.

“We are now able to collect revenue from people that are not just South Carolina residents but people that pass through our state,” said Simrill, who sponsored the House gas-tax proposal.

However, in his veto message, McMaster said the higher gas tax was not a solution.

“Requiring South Carolinians to pay more than 70 percent in additional taxes at the fuel pump is not reform; rather, it is an oversimplified, misguided and ineffective solution to systemic problems of long standing which require thoughtful analysis, restructuring, transparency and prioritization,” McMaster wrote.

If the bill becomes law, S.C. drivers would face:

▪  A 12-cents-a-gallon gas-tax hike. That increase – to be phased in over six years – would cost roughly $1.40 a week for a driver who travels 15,000 miles in a car that gets 25 miles per gallon.

▪  Sales taxes of up to $500 on a vehicle purchase, up from the current maximum of $300

▪  A $250 one-time fee for vehicles bought out of state and later registered in South Carolina

▪  A $120 fee every two years on electric vehicles and a $60 fee on hybrid vehicles every two years

▪  A $16 increase in vehicle registration fees. S.C. drivers under 65 would pay $40 to register a car, up from $24. S.C. drivers 65 and older or handicapped would pay $36, up from $20.

Under the proposal, S.C. residents would be eligible for tax rebates to offset paying the higher gas tax and other tax credits, including for college tuition. When phased in, the tax cuts would cost the state about $105 million a year.

However, McMaster said those cuts were “grossly insufficient” to offset the tax increases in the roads plan.

Cassie Cope: 803-771-8657, @cassielcope

What’s next?

The Legislature could override Gov. Henry McMaster’s veto as soon as Wednesday.

▪ The S.C. House will first take up the proposal.

▪ If two-thirds of House members vote to override the governor’s veto, the bill then will head to the S.C. Senate.

▪ If two-thirds of senators vote to override the governor, the bill will become law July 1.

Both chambers are expected quickly to override the governor, having passed the bill by veto-proof margins – with more than two-thirds of members supporting the proposal.

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