Why Raising the Fuel Tax Is a Terrible Idea
MONEY’S NOT THE PROBLEM. PRIORITIES ARE.
The issue of road funding – or, to put it slightly differently, the question of how South Carolina should fix its broken road system – is now a constant topic in politics and the media. A fair number of state lawmakers have therefore begun to advocate what politicians always advocate when they don’t want to make tough decisions about the budget: raising taxes, specifically the fuel tax.
The lawmakers who support an increase in South Carolina’s fuel tax apparently believe the only thing keeping the state from possessing an excellent road system is a lack of funds. In truth, there are systemic issues with how South Carolina manages its roads that cannot be addressed by simply dumping more money into the Department of Transportation or the Infrastructure Bank. Even if lack of funding were the primary problem with state roads, legislators’ actions contradict their words when it comes to the importance of this alleged deficiency.
During last year’s budget deliberations, the Policy Council easily identified $644 million in spending on non-core functions in the proposed state budget that could have been better spent on the state’s roads. Some portions of this funding may have been politically difficult to shift, but in many instances it would have been obviously correct and politically easy. $86 million worth of the funding identified by SCPC came in the form of a budgetary surplus that wasn’t projected earlier in the year. The budget could have directed these funds to the Department of Transportation, which as lawmakers constantly tell us is sorely underfunded. Instead they chose to use the surplus on a variety of pet projects. (Note: We advocate sending any surplus back to taxpayers. We mention this example merely to question the seriousness of those who pretend the state has no option but to raise the fuel tax.)
Readers who regularly follow news from the legislature could be forgiven for saying to themselves: Wait, didn’t the legislature increase funding for road maintenance and repair back in 2013?
Answer: Yes, sort of. It’s true that the legislature passed and the governor signed a version of a road funding bill in 2013. But the bill in question perpetuates the flaws in our current road-funding system, and will provide little to no actual road maintenance. The 2013 legislation, now law, works by requiring the Department of Transportation to annually transfer $50 million to the State Infrastructure Bank, which will then leverage the funds to issue bonds worth up to $500 million for use on road projects that it sees fit to undertake. The problem? In addition to creating debt, the Infrastructure Bank has historically directed the vast majority of its funds to projects in only a few counties, and has further spent little or nothing on road maintenance and repair. True to its reputation, when the Infrastructure Bank announced projects it was considering funding with its new revenue source, all of the projects were expansionary and none focused on desperately needed maintenance.
South Carolina state government brings in more than enough funds to maintain well-kept state roads. What’s the problem, then? Wasteful spending and backward policies, that’s what. South Carolina will continue to face road maintenance problems until it addresses its current flawed priorities in funding roads. For example: the state owns far more roads than it can maintain (far more, proportionally, than other states), and the unnecessary Infrastructure Bank siphons funds from the DOT to pay for unneeded expansions. There is no law, furthermore, that limits the funding of expansionary road construction projects until existing roads are rated in “good” or “very good” condition by an independent third party.
We suspect most South Carolinians understand that the state of our roads has little to do with an alleged lack of money and everything to do with flawed priorities. Presumably that’s why so many citizens oppose a hike in the fuel tax – so many, in fact, that lawmakers who support the idea are actually scared to sign onto it openly, with one state senator admitting that mandatory roll call voting makes it extremely difficult to round up enough supporters to pass an increase. State policymakers don’t need more money to spend.
They need to be told, rather, what many free-spending college students have had to hear from their parents: You don’t need more spending money; you need to use the money we give you more wisely.