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Legislature: Cleary offers alternative to governor’s road plan
By Jason Lesley
State Sen. Ray Cleary said Gov. Nikki Haley’s plan to fix roads is unworkable and will offer an alternative next week in the form of his own bill that will raise more than twice as much money for infrastructure.
Cleary said Haley’s $400 million proposal to raise the tax on gasoline by 10 cents a gallon, cut the state’s income tax from 7 to 5 percent over 10 years and reorganize the Department of Transportation fails to provide good roads and does not address any growth in traffic.
“What I’m hoping the governor did,” Cleary said, “was to throw something out that says ‘I’m ready to talk.’ ”
Cleary said he told the governor about his plan to raise $1.2 billion. His bill addresses the same concerns Haley raised but in a different manner with a more likely chance of becoming law. “To be honest,” Cleary said, “the governor realizes her income tax plan is dead on arrival. She needs something.”
Haley has promised to veto any alternative road legislation so Cleary’s bill would need strong support in the legislature to win an override. “That’s the essential question everybody has,” Cleary said. A workable plan to fix the state’s roads will require bipartisan approval to pass the Senate, he said.
Cleary said his bill turns the maintenance of over 20,000 miles of roads over to the state’s 46 counties and provides permanent funding. “All of a sudden now, that will allow DOT to be much more efficient and focus where they need to be focused: the main highway systems of the state,” he said. “We would require less money and in my opinion less bureaucracy by eliminating all these county farm roads. There are 15,000 roads in their system that are less than a mile long. One of the reasons I think this is a true reform of SCDOT is that it lets them focus more efficiently, more effectively on what they need to be focusing on: the major arteries of South Carolina.”
Cleary’s proposal would raise the sales tax cap on cars from $300 to $1,400 and rename it the initial registration fee. “We don’t want to gouge the car dealers,” he said, “but we think it needs to be looked at so when you buy that $1 million boat, that $2 million airplane, that $100,000 Mercedes you pay $1,100 more. I don’t think it will stop those people from buying that car, but it generates about $115- to $120-million a year.” Cleary said there’s a reason for calling it a fee. “You cannot bond a tax, but you can bond a fee,” he said. The state could borrow money against projected fees and get more bang for its buck while interest rates are historically low. The counties would get the new money from vehicle sales to pave roads, and DOT would get the first $300 for its needs.
Cleary has an plan for disbursing the money to counties:
• Give every county $750,000 regardless of size;
• Give counties with a penny sales tax going to roads an additional $750,000. “We cannot raise enough fees to pay for every road,” he said. “This way they’ve got skin in the game even if they are smaller counties.”
• Give the rest of the money from fees — over $100 million — to the counties on a per capita basis.
Cleary said that he would have to take a look at Georgetown County’s situation with a portion of an additional penny tax going to roads beginning May 1.
Cleary’s plan raises the fee on gasoline by 10 cents per gallon, costing the average driver $50 more per year, according to government estimates. He would raise the fee for driver’s licenses from $25 to $50 and raise the yearly auto registration cost from $12 to $20. “If you don’t drive a car,” he said, “you pay nothing. It’s strictly a user fee. More than a third of the gas fees would be paid for by out-of-state drivers.”
Other means of income would be to require tags on trailers, require owners of electric cars to pay road user fees and require out-of-state truckers to pay a little more to use the roads. More importantly, he said, there would be up to $5 million more going to county governments through a change in property tax on trucks.
Cleary wants to eliminate most of the state’s tax exemptions — he would leave them on food, prescription drugs, electricity and newsprint — to bring in $300 million more in revenue for the state.
Cleary said his numbers add up to $950 million a year for DOT and $130 million a year for counties to pave roads. Both figures are less than the $1.4 billion DOT says it needs. “The benefit is with SCDOT now focused on major road systems they should become more efficient and need less personnel,” he said. “That, in my opinion should make up the difference.”
Like the governor’s plan, Cleary has also included a tax cut. He would eliminate the 3 percent small business tax rather than the personal income tax. “Quite honestly,” Cleary said, “the income tax reform is a $1.8 billion problem I’m not sure we can solve.” He said he is working on a report showing that South Carolina’s 7 percent income tax is less onerous than the 5 percent income taxes of North Carolina and Georgia because of the deductions South Carolina allows.
Cleary said eliminating the small business tax is better for the state than reducing corporate taxes because small businesses create jobs and the money would remain in the state. “If we are going to create jobs,” he said, “the best way is to incentivise small business to do it. That’s the tax component the governor was asking for. It saves about $155 million a year, which is a doable number.”