Gov. Haley suggests spending $345 million to repair roads

Gov. Nikki Haley wants to start phasing in a 10 cent-a-gallon gas-tax increase and a huge cut in the state’s income tax.

Haley’s proposal for the state budget that starts July 1 — a year when the state will have more than $1 billion in new revenues — outlines her priorities. S.C. lawmakers next month will begin writing the state budget that takes effect July 1.

The Republican governor wants to spend $345 million for roads, including $231 million in one-time money and $49 million from her proposed gas tax increase, to be phased in over three years.

Haley’s road-spending proposal is just shy of the $400 million a year in added spending that she says is needed to maintain S.C. roads and bridges. However, it is only about a quarter of the $1.5 billion a year in added spending that the state Transportation Department has estimated it needs to repair, maintain and expand the state’s roads, bridges and mass transit systems.

Haley’s budget proposal was met with skepticism by legislators. Some said it did not do enough for roads. Others said her proposed tax cut is wrongheaded.

“She can’t address a $40 billion shortfall (for roads) with $400 million,” said S.C. House Minority Leader Todd Rutherford, D-Richland, referring to the Transportation Department’s estimated shortfall through 2040. “It’s not even close. It’s not a drop in the bucket.”

Haley also included $131 million in her budget proposal to phase in the first year of a 2 percentage-point cut in the state’s income tax rates.

Last year, Haley tied her acceptance of a gas-tax hike to cutting the state’s income tax by two percentage points over 10 years. That proposal would reduce the state’s highest tax rate, now 7 percent, to 5 percent.

Critics have said, that when fully phased in, Haley’s income tax cut would cut far move from state revenues than her proposed gas-tax hike would raise for roads, forcing cuts to state services, including education.

Rutherford said he has not had a single constituent ask for an income tax cut. Instead, Richland County residents want their roads fixed and for the state to do more for schools. Citizens understand they have to pay for those things and they’re ready to do so, he said.

However, Haley again vowed Friday “to veto anything that is a net tax increase.”

Haley’s tax-cut proposal will face legislative opposition, including from fellow Republicans.

“I don’t think tax cuts belong in a budget,” said S.C. House Ways and Means chairman Brian White, R-Anderson.

Instead, tax-cut proposals should be freestanding legislation, White said. He added lawmakers must look at unfunded liabilities when considering tax cuts, including the state’s pension system.

State Rep. Gary Simrill, R-York, said it is time to put more money into infrastructure. The state needs catch up on years in the aftermath of Great Recession when needs at state buildings, law enforcement, education and infrastructure grew.

Still, Simrill said it is important the Legislature pass his bill – which the House passed 87-20 last year – to address the reform components of the Transportation Department.

S.C. senators went home this week, after the first week of the Legislature with a bipartisan group working behind the scenes on a compromise plan to pay for road-repairs.

Haley also made education spending a top priority.

She suggested increasing money for schools by more $300 million, including $165 million to increase the amount schools get based on their enrollment to $2,300 a student. That’s an increase of $80 per student and would put a small dent in the $684 million additional that state law says South Carolina should be spending on K-12 schools.

Haley proposed earlier this week the state borrow up to $200 million a year to renovate blighted school buildings or build new ones. Haley put in $3.7 million to study and plan a program to bond to pay for that program, which would likely not begin until 2018, her last year in office.

Haley’s other spending proposals include:

▪  $165 million for flood recovery, including the state’s match for flood-relief money from the Federal Emergency Management Agency and $49 million to pay the state’s share of road-repair costs for roads and bridges damaged by the flood. Haley also proposes spending another $40 million for beach renourishment and roughly $700,000 for seven new employees at the state Department of Health and Environmental Control to regulate dams. In it’s initial budget request the environmental agency asked for $595,000.

▪  $113 million to pay local governments the amount state law says they should receive. The state pays counties and municipalities for state services that the local governments provide. Local governments have not received the amount that state law says they should get since the Great Recession. They argue that being shortchanged by the state forces them to raise taxes.

▪  $96 million to the state’s retirement systems to defer a 0.5 percent increase in pension costs that would be shared by state workers and their employers.

“We’ll take the governor’s recommendations of how to spend the money and we’ll take that into consideration,” White said, adding his committee has been interviewing state agencies about their requests.

This story was originally published January 15, 2016 at 5:03 PM with the headline "Gov. Haley suggests spending $345 million to repair roads."