Roads: Is Raising Taxes Really the Only Option?



Tax hikes are on the mind of legislators. At least that’s what the October 30 meeting of the Ad Hoc Transportation Committee would lead any observer to believe.

The first half of the committee meeting was taken up by presentations from representatives of the U.S. Chamber of Commerce and the National Conference of State Legislatures (NCSL). Janet Kavinosky, the representative from the Chamber, said that states that have successfully managed infrastructure have let needs dictate revenues and not the reverse. Ms. Kavinosky also noted that, with current federal highway funding set to expire in May, the federal government is an unreliable funding source.

The NCSL representative, Jim Reed, focused on funding mechanisms for transportation and stressed that South Carolina has one of the lowest fuel taxes in the nation. Mr. Reed discussed a number of alternative transportation funding mechanisms (mostly taxes) and seemed to speak favorably of several states (Wyoming, Washington, Minnesota) that have raised their fuel taxes in recent years. Of particular note in Mr. Reed’s presentation was a discussion of the Virginia policy of shifting from a pay-at-the-pump fuel tax to, among other things, a wholesale tax on gasoline paid by realtors.

Ms. Kavinosky later stated the wholesale tax is easier politically to raise than a pay-at-the-pump fuel tax. In a similar vein, Mr. Reed suggested that legislators could use the state’s high traffic fatality rate to garner political support for any tax increases.

During questions from the committee, neither of the speakers would explicitly endorse a specific increase to the fuel tax, but they continued to favorably cite the transportation management of other states that have recently increased fuel taxes. When pressed on funding, both speakers said the simplest policy may be indexing the fuel tax to inflation (the tax hasn’t been raised since 1987).

The committee members, for their part, seemed receptive to the speakers’ suggestions. Rep. Joseph Jefferson (D- Berkeley) announced that he planned on introducing a measure to increase the state fuel tax by 10-12 cents. Another representative mentioned a Reason Foundation study that ranks SC as having some of the lowest transportation disbursements per state-controlled mile in the country. What wasn’t mentioned was that the study showed the state’s capital and bridge disbursements (primarily expansionary projects) were more than three times greater than disbursements for maintenance.

The second half of the meeting featured a more technical discussion than the first half. Two speakers from the South Carolina Department of Transportation (SCDOT) discussed the department’s preconstruction process and devolution of state-owned roads to localities. The SCDOT presentations were telling. The agency’s director of preconstruction, Mitchell Metts, stated that on average expansionary projects can take up to three years of planning, thanks mainly to all the permits and planning they require, while resurfacing maintenance work typically requires only about 4 months of preconstruction work/planning.

The second speaker, SCDOT Director of traffic engineering Tony Sheppard, pointed out once again that South Carolina state government controls over 60 percent of public road miles in South Carolina, or roughly 40 percent more than is the average in other states. He also added that roughly half of all state-controlled miles are small local roads, and that projected maintenance costs for these roads make up a small percent of the SCDOT reported transportation funding shortfall through 2040.

In general, the meeting was long on suggestions on how to raise revenue (new taxes or tax hikes) and short on suggestions of how to be more efficient and effective with available funds. And no wonder: Raising taxes, while difficult politically, requires less thought and effort than rooting out waste and inefficiencies. While the simplicity of a tax hike may be appealing to legislators, this does not make it a wise long term solution.

It was clear from the information that SCDOT presented, if not from explicit suggestions, that reforms can be made that don’t involve increased taxes. Devolution of roads and an increased focus on maintenance among them. Legislators owe it to citizens to pursue these reforms before they send them a higher bill for a broken system.

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