Senate Republicans take a swing at breakthrough on roads funding

Sen. Larry Grooms

COLUMBIA — Senate Republicans attempted Thursday to revive the stalled discussions over finding more money for fixing roads, but couldn’t say if their new plan was the breakthrough that has eluded state officials for months.

GOP lawmakers said their plan sought to satisfy competing desires, including Gov. Nikki Haley’s ultimatum that an increase in the gas tax and other vehicle fees be offset with a large reduction in income taxes.

Haley’s office said the governor would consider the proposal, but like all the previous plans, this one also is running into resistance.

At least some Democrats would have to vote for the plan for it to have a chance to pass, but Senate Democrats said they had misgivings about it.

Senate Minority Leader Nikki Setzler, D-West Columbia, said he was glad the Senate would finally debate transportation funding, something he and others have been pushing for this session.

But he was skeptical of the Republicans’ approach.

“It’s a recycled version of the governor’s plan,” Setzler said in an interview. “It gives tax breaks to the super-rich on the backs of working class South Carolinians. Roads is the number one priority. Why do you have to tie all these other things to it?”

Haley, who campaigned last year promising she would reveal her plan for roads after the November election, surprised many by saying in her State of the State speech in January that she would support a hike in the state’s 16.75-cent-per-gallon gas tax.

She vowed to veto a tax increase if it wasn’t coupled with a cut in the state income tax that would cost the state more than $1 billion a year in general fund revenues when fully phased in over 10 years.

That proved to be a poison pill for some lawmakers, who have spent the past four months trying to appease Haley with a smaller income tax cut, or courting a veto by ignoring her demand.

Haley’s other demand — for more control over the state Department of Transportation and how it spends its money — generally hasn’t been a sticking point.

Haley spokeswoman Chaney Adams said the governor was examining the plan but would not yet take sides.

“The governor has made clear the three things she believes are important in this debate: more funding for roads, a competitive tax structure that reduces rather than adds to our citizens’ tax burden, and real reform, so people feel these changes on their roads and not just in their wallets,” Adams said Thursday in a statement. “We just got this plan yesterday, and are looking at the details ... she will weigh in when she thinks it’s constructive to do so.”

Senate Majority Leader Harvey Peeler and Sens. Larry Grooms and Ray Cleary outlined the Senate GOP’s plan at a news conference at the Statehouse.

While most of the Senate GOP caucus stood behind the leaders, perhaps the state’s most powerful leader, Senate Pro Tempore Hugh Leatherman, R-Florence, was absent. Leatherman has been among the most outspoken critics of Haley’s roads plan, backing instead one that would increase the gas tax, raising an additional $800 million a year for roads without any cut in the income tax.

The plan unveiled Thursday would increase the gas tax by 4 cents a gallon every year for three years for a total increase of 12 cents per gallon, raising $400 million initially and eventually $800 million. Increases after that would be tied to inflation with a cap so that South Carolina did not have a higher gas tax than neighbors Georgia and North Carolina.

The governor would get the income tax cut and the control of the Department of Transportation she has demanded

Haley had sought a 2 percent cut in the income tax, from 7 percent to 5 percent in the highest bracket over 10 years. The Senate GOP plan cuts it 1 percent over five years, costing the state about $700 million. The cuts could be delayed if economic growth slows.

House Speaker Jay Lucas said in an interview that he had not yet reviewed the plan, but called the proposal a “step in the right direction.”

“I want to see how much they vary from our plan. It’s important the (final) plan ... be very similar to what we’ve done.”

The House passed a roads plan earlier in the session that would tax fuel at the wholesale level while cutting the tax on gas at the pump, generating about $400 million a year. Its attempt to appease Haley with a smaller income tax cut failed when the governor rejected it outright.

Rep. Gary Simrill, R-Rock Hill, a leading voice on transportation issues, said he doubted the new Senate plan would satisfy conservatives who want to see taxes lowered.

“It’s beyond the pale,” he said of the fee and tax hikes in the Senate GOP plan.

The issue has divided grassroots conservatives, who oppose a gas tax hike, and the business community, which is pushing for more road funding.

Dave Schwartz, state director for the anti-tax Americans for Prosperity, said the group would campaign against the plan, in part because of the large tax hikes and the Legislature would still be involved in deciding who makes transportation decisions.

“We’re opposed to this and we’ll be sending out the alarm bells,” Schwartz said.

Reach Jeremy Borden at 708-5837.