House Leaders’ Gas Tax Bill

South Carolina roads legislature


[The text of this analysis has been updated to reflect the bill’s most recent version. Updates on the bill’s history mentioned at the bottom.]

House leaders filed H.3516, a bill allegedly designed to repair South Carolina’s deteriorating road system. Not surprisingly, the bill treats the entire issue as a revenue problem – it’s premised on the assumption that taxpayers simply haven’t sent enough money to Columbia. Accordingly, it ignores the actual problem: accountability.

Currently, the bill would raise the gas tax by ten cents (for a total gas tax of 26 cents) in two-cent increments over the next five years. Vehicle registration fees would be almost doubled (from $24 to $40 for most vehicles), and a new “infrastructure maintenance fee” would be imposed for initial vehicle registrations in South Carolina, capped at $500. Any vehicle that was not first purchased and registered in South Carolina would be subject to a new $250 fee.

The bill would also impose a new biennial “road use fee” for hybrid and electric vehicles ($60-$120, depending on the vehicle type). And the vehicle sales tax cap would be raised from $300 to $500. All of the new revenue created by the bill would be directed to an “infrastructure maintenance trust fund.” Trust fund revenue could only fund maintenance, not new construction. The DOT would have final say in fund transfers to the STIB (this provision was adopted instead of eliminating the STIB, which had been under consideration).

The revenue from the infrastructure maintenance fee would be split between the state-funded resurfacing program and the notoriously unaccountable State Transportation Infrastructure Bank (STIB), which would use the funds to finance new debt.

The “reform” element added by the House Ways and Means Committee would eliminate the Joint Transportation Review Committee, allow the governor to appoint the DOT commissioners with the advice and consent of both the House and Senate, and would remove the requirement that the legislative congressional delegations approve the governor’s appointees. It would also require the full General Assembly to approve the DOT commission’s pick for DOT secretary rather than just the Senate. This is the DOT “reform” proposal that passed the House last year.

While it is marginally better than the final “reform” approach adopted in Act 275, it leaves in place the DOT commission and full legislative approval for all commissioner and secretary picks. The DOT commission is the heart of the infrastructure governance problem, as by its very nature it stands in the way of true statewide prioritization for road projects and maintenance, transparency, and accountability for the decisions made. Removing the commission, incidentally, is the reform lawmakers of both parties in both houses seem determined not to pass.

Arguments for the bill, and for many similar bills, always assume that road funding has remained static in South Carolina. But it hasn’t. Transportation revenue has seen a steady increase from $1.54 billion in 2012 to more than $2.2 billion in 2016, without any discernible improvements.

There have been no discernible improvements, of course, because existing money is spent badly. And that’s not about to change. The Department of Transportation “reform” bill passed last year blurred the lines of accountability further, keeping the power firmly in the hands of legislative leaders whom the vast majority of South Carolinians can’t vote for and have never heard of.

The solution to South Carolina’s admittedly dire road problem is simple and straightforward:

  • The Department of Transportation commission should be eliminated and the DOT secretary made directly accountable to the governor. Decisions affecting the state’s road system should be made by an official accountable to the entire state – the governor. And when the system fails in one way or another, citizens should know who’s responsible.
  • The STIB should be eliminated entirely. Revenue currently used by the agency to pay bond debt and fund new projects should fund repair and maintenance of the roads we currently have. If bonding is necessary to pay for roads in the future, that debt should be incurred by a fully accountable DOT.
  • Finally: expenditures, matching federal projects, debt, and project prioritization should be fully transparent. Citizens should be able to see how much money is actually available for our roads, and which projects are being funded – the most critical ones, or needless ones in politically important counties.

As it is, the House leaders’ proposed road fix simply takes more money out of the economy and dumps it into the same unaccountable system that’s failing citizens already.

Update, 02/10/2017: On Thursday, February 9 the House Ways and Means committee unanimously passed the bill onto the full House. Along with adding language to make it slightly more difficult to stop the governors DOT board appointees the House exempted military members from a new fee for vehicles purchased out of state.

Update, 02/07/2017: On Tuesday, February 7, a Ways and Means subcommittee passed an amendment to H.3516 that contained elements of “reform”: it would direct all new revenue created by the bill to an “infrastructure maintenance trust fund.” Trust fund revenue could only fund maintenance, not new construction. The amendment also gave the DOT final say in fund transfers to the STIB (this provision was adopted instead of eliminating the STIB, which had been under consideration). The bill was approved with no opposition and will be considered by the full Ways and Means committee on Thursday, 02/09/2017.

Update, 02/03/2017: On Thursday, February 2, the fiscal impact statement of H.3516, the house gas tax bill, was released. Estimates put the revenue from this bill at over $450 million for the first two years.

Update, 2/24/2017: On Tuesday, February 14, the full Ways and Means committee passed an amended version of this bill (see the analysis above). It is now on the contested calendar in the House.  

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