The Buzz

SC Gov. Haley calls for gas tax hike tied to income tax cut

Gov. Nikki Haley unveiled her roads-funding plan during her State of the State address Wednesday, offering a surprise 10-cent-per-gallon gas-tax increase.

But Haley, a Lexington Republican, said she would sign a tax-hike bill only if it included cutting the state’s income tax by 30 percent and restructuring the state’s Department of Transportation.

“If we do all of those things, we will have better roads and a stronger economic engine for our people,” Haley said during her fifth annual address to the General Assembly. “That’s a win-win.”

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Haley has said for months that she would veto raising South Carolina’s near-national-low 16.75-cent-per-gallon gas tax.

She told lawmakers Wednesday she would veto a fuel-tax hike unless they also passed the income-tax cut and new rules for selecting commissioners who oversee road construction projects.

Haley said South Carolinians would save money if all her proposals pass the Legislature. Her office projects the savings at about $5.5 billion over the next decade.

The state would raise $3 billion for roads over the next decade via the extra dime on the gas tax, the governor’s office said. That would address only partially the state’s projected $40 billion-plus deficit in the added money it needs for roads repairs. Meanwhile, South Carolinians would send the state $8.5 billion less in income taxes over the next decade because of her proposed tax cut.

Haley did not say how the state government would compensate for losing tax revenue.

Haley wants the state income-tax rate cut from 7 percent to 5 percent over the next decade, which she said would give South Carolina a rate lower than neighboring Georgia and North Carolina. “It will be a massive draw for jobs and investment to come to our state,” she said.

Haley also said she wants to end the practice of local legislative delegations electing seven of the Transportation Department’s eight commissioners. The governor now names one commissioner.

“Our system screams out for reform and restructuring,” she said. “The condition of our roads and bridges is a statewide concern and yet our dollars are being spent with zero statewide perspective. ... (Let’s) get rid of the legislatively elected transportation commission so the condition of South Carolina’s roads is no longer driven by short-sighted regionalism and political horse trading.”

Haley did not say how she wanted commissioners selected, but she said she would not support spending any more money for roads and bridges until the Transportation Department’s leadership is restructured. “Simply shipping more money into the current bureaucracy would be like blasting water through a leaky hose.”

Making over the Transportation Department, last overhauled in 2007, could be the most difficult part of the governor’s plan to get through the General Assembly, said Senate Majority Leader Harvey Peeler, R-Cherokee.

Minority-party Democrats ripped Haley’s plan, saying it would force deep spending cuts in education and other state programs.

State lawmakers have waited for Haley’s road plan since she first said in July, during her re-election campaign, that she would come out with one. Last week, a House panel delayed voting on its road-funding proposal until the end of the month, the deadline Haley set for her plan.

The House proposal includes letting voters decide on a penny increase in the sales tax for roads and levying the state’s 6-percent sales tax on fuel wholesalers, a cost that would be passed on to motorists. Leaders in the Republican-dominated House said after the State of the State that they would work with Haley on a roads plan.

While Haley’s roads plan caught most of the attention in her 40-minute address, the governor also used the speech to bash unions, promote new worker-training and rural teachers programs, and push for ethics law changes.

Haley took aim at a union trying to organize workers at Boeing’s 7,500-employee aircraft plant in North Charleston.

She said the International Association of Machinists and Aerospace Workers did not think S.C. employees had the skills needed to build 787 Dreamliner jets and filed a federal challenge to Boeing opening its North Charleston plant.

The legal challenge was dropped but Haley said her fight against the union continues. At 3.7 percent, South Carolina has the nation’s third-lowest percentage of union membership, according to federal data.

“Every time you hear a Seattle union boss carry on about how he has the best interests of the Boeing workers in Charleston at heart, remember this: If it was up to that same union boss, there would be no Boeing workers in Charleston,” Haley said.

Haley also unveiled a $15 million worker-training program aimed at smaller business and workers looking to find jobs in high-demand fields.

The governor said she wants a workforce prepared to help fill the jobs that companies need filled. Business groups have put improved workforce training atop their legislative priorities along with roads funding.

In the new program, called Succeed, workers would repay the state for their training, while businesses would receive grants from the state.

Haley acknowledged challenges at the embattled Department of Social Services, where problems were found during hearings by a state Senate panel. The agency, which critics say failed to protect children who later died, has added caseworkers and shifts, improved technology and developed partnerships with law enforcement, Haley said.

“We have changed DSS for the better,” she said. “It is in a far different place than it was a year ago, but there is also still work to do.”

Haley also touted her plan to entice more qualified teachers to work in poor school districts by paying for their college tuition or student loans.

And as she did at last week’s inauguration, Haley called for the General Assembly to pass ethics reform. “Many words have been spoken on this issue and much time wasted in these chambers with no result.”

In her first State of the State address since winning re-election in November, Haley said she does not see her 14.5 percent re-election victory as a mandate to push through her agenda.

“I never saw the election as a referendum on me, but on all of us, on the direction we have taken South Carolina over the last four years,” she said. “Likewise, I don’t view the results as anything but ... a command by the people of our state to continue along the path we have traveled together since I first took the oath of office.”

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