The Governor’s Roads Plan

H.3580 is Governor Haley’s plan to fix South Carolina’s roads, first described during the 2015 state of the state address. The bill attempts to reform the management of the Department of Transportation (DOT) by removing the commission that currently sets policy and leaving all policy decisions to the Secretary of Transportation, who is appointed by the Governor. The bill also replaces the DOT chair’s spot on the Infrastructure Bank (STIB) board with the Secretary of Transportation. This change brings the likely balance of the STIB board to three gubernatorial appointments, and four legislative appointments.

The remainder of the bill consists of tax and revenue swaps.

One provision would decrease the rate of taxation for each income tax bracket by 0.2 percent per year for 10 years until income tax rates were reduced by 2 percent in total. This change would reduce the top bracket (applying to income over roughly $14,400) from 7 to 5 percent.

Another provision would increase the state gas tax by 3.33 cents a year for three years for a total 10 cents increase. Finally, the bill would transfer the remaining 50 percent of revenues from sales tax on motor vehicles that isn’t already dedicated to the state Highway Fund to that fund. In current law, these revenues are divided between the General Fund and the Education Improvement Act (EIA) fund.

The transfer of authority from the DOT Commission to the Secretary of Transportation is a necessary reform that will increase DOT accountability and thereby pressure the department to make better use of its resources.

The remaining portions of the bill, however, are deeply misguided. One legislature cannot bind the will of a future legislature, and so it’s highly doubtful that a tax cut scheduled to be phased in over ten years will ever be fully – or even mostly – implemented. Moreover, even if the tax cut is implemented perfectly, about a million citizens who on average pay no income tax would see only a tax increase from Haley’s plan. The shift in motor vehicle excise tax revenues will also likely result in a tax increase in the future, since the state will attempt to make up for the EIA funds lost revenue.

As for the gas tax increase, there are a multiple reforms to our road governance system that need to be enacted before citizens are asked to pay one more cent for roads. Citizens should not be forced to pay more in taxes in order to pay for more wasteful spending, which is exactly what they will be doing with a tax increase absent other needed reforms.

A more detailed analysis of the governor’s plan, together with a list of necessary transportation reforms, can be found here.

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