January 31, 2013

S.C. House speaker wants auto taxes used for roads

S.C. Republican lawmakers think they have found a way to spend more money to repair the state’s roads without raising the gas tax: sales taxes on vehicles.

S.C. Republican lawmakers think they have found a way to spend more money to repair the state’s roads without raising the gas tax: sales taxes on vehicles.

The state now collects about $100 million a year in sales taxes on car and truck sales. That money goes to the state’s general fund, where it helps pay for law enforcement, health care and public education.

However, House Speaker Bobby Harrell, R-Charleston, has introduced a bill that would take that $100 million out of the general fund and give it to the state Department of Transportation to spend on road repairs.

Some Democrats oppose the idea. They say it would pay for roads at the expense of education.

The state tax on vehicle sales is 5 percent or $300, whichever is lower. Eighty percent of the money raised by the sales tax goes to the general fund, while the remaining 20 percent goes to the Education Improvement Act, one of the major funding mechanisms for S.C. public education.

The state has roughly $30 billion in road and bridge repair needs over the next 20 years that it cannot pay for from current funding sources – largely the state gas tax and federal money. That need has lawmakers scrambling to find ways to pay for roads.

The Board of Economic Advisors estimates if the bill becomes law, it would cut education funding by $20 million in the 2013-14 budget year, which begins July 1. The bill would cut another $80 million from the general fund.

“It makes sense to me that money spent on cars ought to go to roads,” Harrell said. “The typical growth in revenue in the state can more than sustain this amount of money being moved over.”

But some Democrats disagree.

Senate Minority Leader Nikki Setzler, D-Lexington, wants to borrow money to pay for road repairs, an idea he calls “one of many or several alternatives to fund infrastructure.”

Taking money from the general fund, as Harrell proposes, is not part of Setzler’s plan. “You can’t keep dedicating current revenue from various sources because you then decrease the amount you’ve got to deal with,” Setzler said, noting education funding would be cut.

In the state House of Representatives, Minority Leader Todd Rutherford, D-Richland, opposes Harrell’s proposal, comparing it to a “shell game.”

“There is only so much general fund money to go around. Our needs are exceeding our income, and we’ve got to figure out a better way to handle that,” Rutherford said.

Asked what better ways are available to pay for road repairs, Rutherford said: “The (Democratic) caucus has not addressed that yet. But we will.”

The state House of Representatives has passed a version of Harrell’s proposal before, but the state Senate never has approved it.

Last year, a report by the state Transportation Infrastructure Task Force said South Carolina has $48.3 billion in road repair needs through 2033. The report estimated the state will have $19 billion to pay for those repairs, leaving a shortfall of $29 billion.

Citing that need, a growing number of state lawmakers have been pushing for more spending on roads.

“We’re so far behind, I’m open to anything,” said Senate Majority Leader Harvey Peeler, R-Cherokee, adding that includes Setzler’s idea of borrowing money.

Gov. Nikki Haley has proposed spending about $90 million on road and bridge improvements next year, but only if that money is available. Haley expects the state’s revenues will grow by that amount by the time the budget reaches her desk.

But once Haley’s proposed $90 million is spent, it’s gone, with no guarantee the state’s revenues will continue to grow enough to budget added sums for roads in future years.

That uncertainty – over whether the state will have enough added money in future years to fix the state’s roads – is why lobbyist Bill Ross of the South Carolina Alliance to Fix Our Roads group, which has been advocating raising the state’s gas tax, says he supports Harrell’s bill. The speaker’s plan would give lawmakers $100 million every year to spend on road improvements, Ross said.

“That’s a start and, certainly, a good start,” Ross said.

Haley’s spokesman declined Thursday to comment on Harrell’s proposal.

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