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Legislature: Haley gas tax plan surprises lawmakers

By Jason Lesley
Coastal Observer

Gov. Nikki Haley’s proposal to raise South Carolina’s tax on gasoline in her State of the State speech last week caught members of the General Assembly by surprise, according to state Rep. Stephen Goldfinch.

“We had no idea,” Goldfinch said. “My initial response was that she is going to get killed on this thing. She shopped it around with various groups, of course. She didn’t shop it around with the legislature, which is somewhat frustrating.”

Goldfinch told members of the Waccamaw Neck Republican Club early last week that one of his reasons for opposing a gasoline tax increase was because Haley had promised to veto it. Now that it’s on the table, both Goldfinch and Sen. Ray Cleary say the governor needs to provide a lot more detail. She called for raising the state’s 16.75-cents-a-gallon tax on gasoline by 10 cents over three years, cutting the state’s 7 percent income tax by 2 percent over 10 years and changing the way commissioners are selected for the Department of Transportation. She said the elements were a package deal.

“There are a couple flaws with it,” Goldfinch said. “That doesn’t mean she won’t iron them out. It doesn’t mean she won’t eventually give us a plan that will work. Overall, the plan didn’t provide any details how to get that done. The problem I see is the swap. Forty percent of our budget is made up of income tax. The swap would leave a budget shortfall because we are increasing expenditures on the highway side and eating up the surplus from the gas tax while we are cutting income tax to the tune of a little over a billion dollars — 20 percent of our usable budget. It sounds really good, but we have to have a plan to replace that money. We have people demanding we increase expenditures for education, mental health, DSS. Cutting a billion out of the budget every year is just not going to fly. The governor has to come up with more specifics.”

Cleary said he hopes Haley’s offer signals a willingness to work with legislators to address the state’s $15 billion infrastructure deficit and is not a “poison pill” as some critics suggest. “I’m hoping that her objective is to open the door, saying that we will look at gasoline fees and work with people,” Cleary said. “I hope it’s not ‘my way or the highway.’ We’ve got 45 different ideas on how to fix it. I don’t think one is more right than another. I’m hoping that’s her attitude.”

State Senate President Pro Tem Hugh Leatherman, a Republican from Florence, said Haley’s proposal was dead on arrival. The loss in state income tax revenue —$1.8 billion in 2025 alone — would force huge cuts to other state programs, including education, public safety and mental health without improving the roads. Leatherman said restructuring the Transportation Department could be tough to pass, noting the governor didn’t propose how to restructure it.

Goldfinch said DOT reform is a non-starter. “I don’t see that ever happening,” he said. “People expect their representatives to help them with road issues. Under the current system constituents can hold us accountable. I’m not sure who they go to. They can’t call the governor and ask her to fix a pothole.” Goldfinch said DOT recently agreed to lower the speed limit from 45 miles per hour to 40 on Martin Luther King Road in Pawleys Island after he passed along a request from citizens to make it safer.

A 2 percent state income tax cut in North Carolina, Haley said during her State of the State speech, is an example of how neighboring states are lowering taxes to become more competitive.

“North Carolina gets a 38.5-cents-a-gallon gas tax,” Cleary said. “If we funded roads like North Carolina, maybe we could do it that way. I don’t have a problem with tax cuts. Out of self-interest I should be for it. However, if she thinks there’s a billion dollars in there, she should take her budget back and show us where it is. Honestly, all her state agencies say they need more: DSS, Education, Juvenile Justice and things like that, reasonable things we have to look at. Aid to Local Governments should be $100 million, and we’re funding it at $30 million.”

Cleary said the governor’s 10-cents-a-gallon gas tax hike would yield about $350 million a year. The last two state secretaries of transportation said the state needed a minimum of $400 million more per year just to maintain the roads in their present condition. “That doesn’t get us to where we need to be,” Cleary said. “I think we can get there with fees and taxes.”

Cleary said taxpayers should consider that 35 percent of the state’s gasoline taxes are paid by out-of-state drivers, and it’s essentially a user fee. “An elderly couple spends a whole lot less on gasoline than someone driving 100,000 miles a year,” he said. “A lot of little things add up, but a gas tax adds up the quickest.”

Mike Wooten, 7th District highway commissioner, said he was glad the governor has proposed raising the tax on gasoline but took exception to her criticism that commissioners represent their districts at the expense of the state’s needs. Haley’s proposal would supposedly abolish district representation.

“The thing that concerns me the most in her State of the State,” Wooten said, “was that the commissioners argue for their own districts. This is my third year on the commission, and I have never seen that once. I don’t know where she got that. Either she has not communicated well with our secretary, or it’s a rumor. I can tell you that is totally untrue.”

Wooten said he’s heard from experienced people that the present highway commission is the best in decades at looking out for the entire state. “Virginia rearranged its DOT four times before they finally fessed up and realized they didn’t have enough money,” he said. “I was hoping South Carolina would be smarter than Virginia and step up to the plate and do what they needed to do.”

Wooten said estimates of the cost to maintain the state’s roads in their present condition are rising. In addition to more than $30 million in cleanup costs not reimbursed by the federal government, damage caused by last February’s ice storm is still being counted. “Our roads are not built for snow and ice,” Wooten said. “We live in the South. Roads that experienced that freeze-and-thaw action are tearing all to pieces. Our best estimate of the damage is in excess of $100 million. That ice storm cost South Carolina taxpayers, in round numbers, $130 million. That came right out of DOT’s budget.

“Legislators are quick to criticize DOT for not managing things. We’ve managed the fourth largest system of roads in America with the third-from-the-bottom funding for years and years. The governor doesn’t understand how good we are at what we do. I’ll stack our DOT staff against any other state’s DOT staff. If they decide we need to go home, I’ve got grandkids, a farm in Florence County and partners who would love to see me at my desk a whole lot more.”

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