COLUMBIA — South Carolina drivers would expect to eventually fork over 10 cents per gallon more at the pump to fund statewide transportation improvements under a plan that passed the S.C. House on Wednesday.
But the plan, which passed 87-20, faces an uncertain political path going forward, as House members rejected a potential compromise with Gov. Nikki Haley over cutting the state’s income tax. They also appear to be nowhere close to a competing Senate bill.
Two prominent Charleston-area lawmakers, Republican Rep. Jim Merrill and Democratic Rep. Leon Stavrinakis also decried the plan, voting against what they said was an “anti-Charleston” measure that favors rural areas.
Merrill said House leaders, including Rep. Gary Simrill, R-Rock Hill, played a good political game by assuaging rural-area lawmakers and ginning up a strong majority. “Good politics, bad policy,” Merrill said. “It’s a pyrrhic victory.”
Stavrinakis said Charleston stands to lose out when the area contributes significant tax dollars to other parts of the state. “It seems all it buys us is resentment,” Stavrinakis said.
Still, the House’s complex plan crafted over seven months of deliberation spells the most significant new transportation funding in years — at least $400 million for transportation projects, primarily through a new tax on wholesale gasoline.
It won over a strong majority by mashing together competing priorities and political agendas.
The plan gives the governor more control over the Department of Transportation, and the stiffer price at the pump is coupled with a slight income tax reduction to make up the difference.
The new transportation funding is enough to fix the Palmetto State’s basic maintenance problems, according to DOT, but it stops far short of the more than $1 billion per year that estimates show is needed to enhance and improve the ailing system.
Simrill said he hopes Haley will not veto the measure. The governor had previously asked for a 2 percent income tax cut over 10 years if the Legislature wanted to raise the state’s gas tax.
Regardless, the House appears to have the two-thirds majority vote necessary to override a potential Haley veto. “The politics in the bill has been the art of compromise through consensus,” Simrill said.
A Haley spokeswoman did not reply to a request for comment.
Merrill and Stavrinakis said the bill does two things that could adversely affect the Charleston area. First, it allocates an additional $25 million per year equally among the state’s 46 counties instead of accounting for population and other factors. It also reforms the State Infrastructure Bank, a body that has broad borrowing power for major infrastructure projects and has been kind to Charleston-area projects over the years.
Under the bill, the SIB board would be made up of seven gubernatorial appointees and six appointed by the Legislature. That greatly expanded board “empowers” big projects in rural areas, Merrill said.
The complex bill was a successful attempt to bring together competing GOP factions.
Under the plan:
The state’s gas tax would be cut from about 16 cents to 10 cents. However, a new 6 percent tax on wholesale gasoline would raise approximately $370 million more at current gas prices. The tax would hit a cap when gas reached around $3 per gallon, Simrill said, or 10 cents per gallon in taxes at the pump.
A corresponding income tax decrease of $48 would equal the increase in what most drivers would pay per year.
The governor would appoint the Department of Transportation board instead of the Legislature, which now appoints all but one member. Seven of the eight members on that board would then serve on a reconstituted State Infrastructure Bank board. The SIB, which has the authority to borrow for big projects, would also be run by the governor’s appointees as well as the Legislature’s. The threshold for a project to be funded by the SIB would drop from $100 million to $25 million.
Counties could take over more local roads. As an incentive, counties would get at least $1 million and would get a greater percentage of the state’s gas-tax revenue the more roads they take over.
House members rejected a push by Rep. Rick Quinn, R-Columbia, for a bigger income tax decrease. That vote split the GOP caucus 35-35 and Democrats were able to kill it. “We tried to make a good-faith effort to give the governor what she wanted,” Quinn said.
A competing Senate plan would raise money through a gas-tax increase and higher fees for driver’s licenses and car tags. It would generate $800 million for roads, but doesn’t cut income taxes.
House Speaker Jay Lucas, R-Darlington, said in a statement that lawmakers had taken a stand to raise taxes that was necessary, if politically unpopular among some conservatives.
“The economic value at stake is far greater than the price of politics,” Lucas said. “As our roads plan advances through the legislative process, I am confident the House will continue to work with Governor Nikki Haley and Senate leadership to ensure we meet our state’s needs and repair our crumbling road and bridge system.”
Reach Jeremy Borden at 708-5837.