What you need to know about South Carolina’s gas tax
Motorists in South Carolina have paid a combined $198 million more at the pump over the last two years to repair the state’s crumbling roads — and they are about to pay even more.
Starting Monday, and just in time for the July 4 holiday, drivers will pay an additional 2 cents in gas tax per gallon of fuel, bringing the total tax paid at the pump to nearly 23 cents a gallon. The increase — the third of six annual 2-cent gas tax hikes state leaders approved in 2017 — will generate an additional $70 million a year for the state’s roads, according to estimates.
The benefits of paying more at the pump, though, remain to be seen in some S.C. communities.
Twelve of the state’s 46 counties have seen no completed road reconstruction or resurfacing projects, including Beaufort County, with gas tax revenues collected as of May 31 as a result of the new law, South Carolina Department of Transportation records show.
“The slogan was ‘fix our roads’ or ‘fix our potholes.’ That’s the way this thing was sold,” said state Sen. Tom Davis, R-Beaufort, who opposed the 2017 gas-tax increase and filibustered earlier proposals. “And a large amount … hasn’t been spent yet, and it’s not clear to me that money has been prioritized on roads. It’s mostly collected and sitting in an account.
“I haven’t seen the sort of massive fixing and repairing of existing infrastructure that was promised.”
Decades to get here
Some S.C. drivers may not yet notice it, but an unprecedented amount of road construction is taking place across South Carolina, fueled by an influx of new gas tax revenue, set to increase again Monday.
As of the end of May, roughly 7% — or $71 million — of the $1 billion in identified road and bridge projects had been completed.
State and industry officials and transportation experts say repairing South Carolina’s highway system after three decades of neglect will take more than a decade to complete.
“South Carolina is working to tackle one of the biggest and most pressing challenges facing the state,” said Jennifer Patterson, executive director of the South Carolina Alliance to Fix Our Road, a nonprofit that supported raising the gas tax. “This work is important, long overdue, and certainly is going to take time.”
“Unfortunately, we live in a world of instant gratification, so being patient is often easier said than done,” Patterson said.
South Carolina Transportation Secretary Christy Hall stressed the state had $11 billion worth of pavement needs as a result of 30 years’ worth of backlogged maintenance.
While not every road will be paved, Hall said the public will see a dramatic increase in construction across the state over the next three years with the continued increase of investment under the gas tax.
Last week, South Carolina DOT Commissioners approved an additional $487 million worth of projects in all 46 counties scheduled to go to bid between July 2019 and June 2020. About $387 million of that money will be funded by the gas-tax-hike law to preserve, rebuild or make major repairs to state-owned roads and highways.
“We are doing our best to develop what we said we would, and we believe we have,” Hall said.
Why the delay?
Currently, about $871 million worth of work is under contract and schedule for construction — work that will likely take three years to complete, Hall told The State.
However, Hall said over the next decade, every one of South Carolina’s 46 counties will see major infrastructure projects underway as progress is made on more than $3.3 billion worth of overall DOT work that is under contract, including the nearly $1 billion coming from the gas-tax-hike law.
Prior to the Legislature passing the 2017 roads bill, the state averaged around $1 billion in road and bridge work annually. Of the $3.3 billion, $1.5 billion has been paid out for completed projects.
“I understand people are concerned about money piling up over there … but you have to have cash flow when you have billions of dollars in outstanding contracts,” said S.C. transportation lobbyist Michael Covington. “You have to manage the money.”
Road projects, too, must meet specific guidelines, design and engineering standards, and permitting requirements — all of which takes time, officials said.
Contractors, as well, have needed time to ramp up their operations, hiring additional workers, building or expanding asphalt plants, and purchasing more equipment.
Projects are accumulating across the state and paving companies — like others in the state — are struggling to find and keep skilled workers to pour new pavement, build new bridges and widen highways, according to industry officials.
In May, the state’s asphalt industry had 350 jobs open that companies were looking to fill, and the paving industry anticipates more than 1,000 jobs will be created over the next five years, according to the S.C. Asphalt Pavement Association.
The association recently launched a workforce development campaign to raise awareness about job opportunities being created due in large part to the 2017 S.C. roads bill. Statewide TV and radio ads have been running since January, and billboards were put up in March.
Shawn Goodwin, president of Palmetto Corp headquartered in Conway, said the company has hired about 200 employees since 2017, doubling its payroll to $600,000 a week and expanding its workforce to nearly 600 workers. The company opened a new asphalt plant in Lugoff in September that employs roughly 80 people.
Five other plants have opened in the state since the gas-tax hike took effect, and two more are expected to open in the next two months, according to the DOT.
“The idea that the DOT will be spending more money on improving road infrastructure, we felt like it was a good time to expand our business into another market,” Goodwin said.
The company thus far has been paid more than $11 million for work under the gas-tax law, and is one of about a dozen companies in the state who have received the bulk of the money paid out by the DOT as of May 31.
Finding and retaining reliable workers — let along those that are trained — though, has been challenging, Goodwin said.
“We’ve probably hired 200 people this year to increase our workforce by 50 people,” he said. “Anytime you’re working in environment with three to four percent unemployment it’s hard to find good, qualified people, because they’re all working somewhere.
“We could probably (hire another) 20 to 30 people right now.”
What you’re paying
In 2017, state lawmakers approved a gas tax increase of 2 cents per year for six years. The law also increased the cap on the motor vehicle sales tax — to $500 from $300 — and added or increased other user fees to provide an estimated $630 million a year more for roads.
Despite the increase, South Carolina’s gas tax — now 20.75 cents per gallon — is one of the lowest in the country. By comparison, drivers in Georgia and North Carolina pay 31.6 cents per gallon and 35.4 cents per gallon, respectively.
As of the end of May, more than $700 million had been deposited into the state Infrastructure Maintenance Trust Fund, the state’s gas tax fund, according to the state’s roads agency. About $200 million of that money was generated by the gas tax increase.
South Carolina’s road system has seen slight improvement in the last two years.
As much as 9% of South Carolina’s 850 miles of interstate pavement recovered from “poor” to “good” condition as a result of resurfacing — from rutted, pot-marked roads to new pavement — from 2016 to 2018. That compares to 3% of the roughly 9,500 miles of primary highway pavement that improved from “poor” to “good.”
As of last year, 74% of interstates and 26% of major highways in the state were in “good” condition, up from 65% and 23%, respectively, in 2016.
The DOT’s 10-year plan calls for 92% of interstate pavement and slightly more than half (53%) of the state’s primary highway system to be rated in “good” condition in 2026.
Meanwhile, more and more vehicles are driving on S.C. highways, adding strain on the state’s road system, according to numbers from the S.C. Department of Motor Vehicles.
About 190,000 more vehicles were registered in the state as of May 31 compared to the same time in 2017, just before the gas tax hike took effect, according to the DMV.
State transportation officials estimate the state needs up to $1.5 billion a year in additional money to repair, maintain and expand the state’s roads by 2040.
“The condition of the (state’s road) system has been on a downhill trend line, and digging out of a hole that’s been dug over the last 30 years is likely to take 20 years for the fourth-largest” state-maintained road system in the nation, Hall said.
About 80 percent of the state’s more than 41,000 miles of roads needs resurfacing or rebuilding, and 465 out of 750 “structurally deficient” and load-restricted bridges statewide have to be replaced, DOT officials have said.
How it’s spent
About two-thirds of the $1 billion in road and bridge work is earmarked to pay for paving 2,400 miles of state roads. Less than a quarter is earmarked to pay for 32 miles of interstate widening. About $106 million is set aside for rural road safety improvements, such as widening shoulders and adding guardrails, rumble strips and reflective markings. Nearly $11 million will replace 13 structurally deficient bridges, records show.
The S.C. DOT currently has $1 billion invested in pavement projects — from all state and federal sources — up from $291 million before the gast-tax-hike law was passed. Hall said that number will continue to climb each year. The S.C. DOT plans to have $702 million invested in paving annually once the 12-cent gas tax hike is fully implemented in 2022.
Through May, the S.C. DOT has contracted out the paving of about 2,400 miles of state road and completed 40 bridge projects, with another 33 bridge projects under construction.
South Carolina has completed more than 70 miles of interstate widening since 2017, including stretches of I-77 and I-26 east of Columbia. Another $2 billion worth of interstate upgrades is expected to begin in the next 12 to 18 months, including Carolina Crossroads (Malfunction Junction), I-26 from Newberry to Columbia and I-85 in Cherokee and Spartanburg counties.
In 2022, another $3 billion worth of interstate work is anticipated, primarily around Charleston, including widening of I-526.
“They’re putting the money where it needs to go, repaving and widening,” Covington said. “The main pledge (of the S.C. DOT) was to improve existing roads — a fix-it-first approach — and that’s what I see them doing. They’re ramping up about as quickly as you can in the world of road building.”
Of the $171 million paid out to date to contractors under the gas-tax hike law, more than $100 million was paid to rehab, preserve and resurface existing roads, according to DOT records.
Another nearly $35 million was distributed to the state’s 46 counties to fund local transportation projects and improve state and county roads and city streets. Nearly $13 million was set aside to help pay for a special tax credit for S.C. taxpayers to offset their cost of preventive vehicle maintenance, such as tires and oil changes.
While the lion’s share of the benefit of the gas-tax hike has yet to be seen, South Carolina business, manufacturing and trucking association representatives say they are seeing some positive results.
“Some are seeing improvement, where others may not. It depends on where they operate,” Rick Todd with the S.C. Trucking Association said of trucking companies operating in the state.
Generally, he said the association has been pleased with how the DOT has administered gas-tax revenues.
“I give them the benefit of every doubt,” Todd said of the DOT. “We monitor and look at what they’re doing and attend DOT commission meetings. Time is money and anything that can make it safer and more efficient, the better.”
Ted Pitts, president and CEO of the S.C. Chamber of Commerce, said the new road money is making a positive economic impact on the state.
“After decades of (neglect), the road construction industry is seeing growth,” Pitts said, noting companies are guaranteeing a full 40-hour work week, whereas before they could not.
“The state has implemented a responsible system ... using metrics to decide what has the most need,” he said. “(The S.C. DOT) has done a great job taking politics out of it. ... Taxpayers should feel good about the process.”