Senators set up showdown with Haley, House by approving gas tax hike

Senators on Tuesday approved a 12-cent-per-gallon increase in the state’s gas tax to raising funds for improving roads, courting rejection by the House and a veto by Gov. Nikki Haley.

Lawmakers engaged in a heated exchange Tuesday before a Senate panel approved increasing fees and the state’s gas tax, raising an estimated $800 million more a year for roads and setting up a showdown with Gov. Nikki Haley.

The Senate Finance Committee voted 14-8 to send the bill to the full Senate, where it will face a race against time as senators try to clear a stack of bills, including a controversial 20-week restriction on abortions, and pass a budget with less than three weeks remaining in this year’s session.

The roads bill also could be delayed by a procedural hold placed on it by Sens. Tom Davis, R-Beaufort, and Kevin Bryant, R-Anderson, who argued it shouldn’t have been approved without the offsetting cut in the state’s income tax that Haley has demanded in threatening to veto a standalone gas tax hike.

“It just seems to me that in a Republican-controlled Senate finance committee, to not take up something that the governor has highlighted in her State of the State, sort of flies in the face of what voters said in the last general election,” said Davis.

Davis also warned that the gas tax hike in the bill would be the “largest tax increase in South Carolina history.”

The bill increases the state’s 16.75-cent-per-gallon gas tax, among the lowest in the country, by 12 cents over three years to 28 cents by 2017. After that, it can rise another two cents to keep pace with inflation. It also increases fees for driver’s licenses.

Haley has threatened to veto any bill that increases the gas tax without a significant income tax reduction. Her long-promised roads plan revealed in her State of the State speech in January called for a 10-cent per gallon increase in the gas tax over three years and a reduction in the state income tax from 7 to 5 percent over 10 years. Haley also demanded a reorganization of the state’s Department of Transportation that would give her more control over how it spent its funds.

Most lawmakers have balked at considering her plan because of the income tax cut which would have cost the state as much as $1.8 million once it was completely phased in.

The House, instead, passed a transportation funding bill that would increase roads funding by an estimated $400 million a year by reducing the gas tax, but adding a tax on fuel at the wholesale level. Haley vowed to veto that as well because it only reduced the income tax by around $50 million a year, saving the average taxpayer about $48 on income tax.

She lashed out at lawmakers on Facebook, and has been touring the state to call out lawmakers in their home districts with whom she disagrees, including the highest ranking senator, President Pro Tem Hugh Leatherman, R-Florence.

But the Senate panel chose to delete the language of the House bill, and replaced it with the Senate’s version that passed a month ago, leaving it a House bill in name only.

In its current form, it will not have the House’s support, said Rep. Gary Simrill, R-Rock Hill, the main sponsor of the House bill.

“What the Senate did was strip the reform measures, strip any money that would go back to the taxpayer, and was left with nothing but a funding component, with no oversight and no checks and no balances,” said Simrill, adding that he’s hopeful those components will be reattached to the bill on the Senate floor.

Leatherman said he couldn’t predict what changes senators will propose to the bill on the floor. The Senate, however, wants to get something done to improve the state’s roads this year, he said.

Reach Cynthia Roldan at 708-5891.