Revenue growth sets up battle over need for gas-tax hike

COLUMBIA — Budget forecasters say South Carolina will have an added $1.2 billion next budget year, setting up a battle between transportation advocates pushing for a gas tax hike and opponents who argue the state doesn’t need to increase taxes to fix its roads.

The S.C. Board of Economic Advisors, which met Tuesday to discuss the forecast for the state’s 2016-17 budget year, said the state’s growing economy will generate an estimated $380 million in new tax revenues.

The rest of the $1.2 billion is unallocated and unspent money from this and previous budget years.

Having such large sums for discretionary spending is unusual — and refreshing, said Chad Walldorf, chairman of the advisory board. Part of it is due to the economic rebound, but he also credited “prudent budget practices” by Gov. Nikki Haley and the General Assembly.

“This is a significantly larger amount of unallocated funds than I have seen in any of my time involved in state government,” Walldorf said. “I’m hopeful that the powers that be will continue to exhibit budget restraints and perhaps use these funds for prudent needs like shoring up our underfunded pension system.”

That much money also means more people fighting for it, said Sen. Tom Davis, R-Beaufort. Davis, who advocated for using this year’s extra cash on roads, said the extra money simply means a lot of money being collected from the state’s taxpayers.

“We need to be focusing on how to best spend that money, how to go ahead and repair what needs to be repaired, and stop the foolish practice of allocating money for politically driven projects and areas that don’t need them,” Davis said. “And after we do that, then let’s have a discussion about whether the gas tax is needed. I don’t think we’re going to need one.”

Roads advocates aren’t the only ones who will be vying for the extra cash. Flooding last month caused at least $1 billion in damage, of which the state will have to part a percentage. Several agencies also are asking for millions in new money, including the Department of Social Services. And lawmakers also have to tackle a court order to improve education for poor and rural students.

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The solution may involve redirecting more state cash toward education.

On top of all of those needs, lawmakers have the state’s universities in need of cash for capital improvement projects, after years of dwindling budgets, said Sen. Ray Cleary, R-Murrells Inlet. Cleary was a proponent of a plan that sought to increase the gas tax and several motorist-related fees to raise about $800 million for roads during the 2015 legislative session.

He said that despite the estimates, he still expects a roads bill to pass that increases the gas tax and fees, reforms the Department of Transportation, and gives Haley the income tax cut she’s been demanding as a trade-off.

“I think what you’re going to see is Republicans digging into the fact that she wants tax relief to get to roads,” Cleary said. “Plus, who wants to vote against income tax reduction whether we can afford it or not?”

Reach Cynthia Roldan at (843) 708-5891.

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