How a fix for SC roads fell apart

One place where road work is being done: I-20 between Alpine and Spears Creek Church Road.
One place where road work is being done: I-20 between Alpine and Spears Creek Church Road. tdominick@thestate.com

Who is to blame for the failure of a long-term roads fix to pass the S.C. Legislature this year?

The better question, according to legislators, is: Who is not to blame?

Gov. Nikki Haley. The Senate Finance Committee. Sen. Tom Davis, R-Beaufort. The Senate. Legislators unwilling to prioritize state spending.

The road repair issue will return next year.

But filling potholes will be more political in 2016, when every one of the General Assembly’s 170 seats is up for election and election year politics could make coming up with a roads plan even more difficult.

The scolding already has begun for lawmakers who let the clock run out on what they, Haley and the business community had declared the state’s most pressing need.

“The business community is getting a clear picture on which legislators we can count on to address the issues facing our state’s competitiveness and the safety of our citizens,” Ted Pitts, chief executive of the S.C. Chamber of Commerce, said in a news release Thursday after the Legislature’s regular session ended.

This year’s effort did not fail for lack of proposals.

Haley and the state House each had a plan. The state Senate had two major plans.

But Haley and lawmakers failed to come to an agreement on the proposed solutions, including raising gas taxes to pay for road repairs, reforming the agency that decides how road money is spent and cutting taxes to offset higher costs at the pump.

Heading into summer, the sides remain far apart.

On Thursday, as the session wound down to a finish, Haley was sticking to her plan – raise the gas tax by 10 cents a gallon, cut the state’s top-end income tax to 5 percent from 7 percent and reform the S.C. Transportation Department.

Roads plans in the House and Senate were more cautious on cutting taxes, saying Haley’s tax-swap plan depended on strong, steady economic growth over the next decade.

“I feel more strongly about that plan today than when I announced it at the State of the State,” Haley told reporters Thursday. “The deal that we came up with was the largest investment in transportation in S.C. history and the largest tax cut in S.C. history. ... We're not going to back down on those issues.”

Haley’s new hard line

House members started working in September on a roads solution.

According to the S.C. Department of Transportation, that fix required a lot of added state money – from $400 million a year just to maintain roads and bridges to as much as $1.5 billion a year to meet the state’s expanding transportation needs.

During the fall, House members, led by state Rep. Gary Simrill, R-York, were working under the assumption that Haley would veto any proposal that increased the gas tax – a veto the governor promised while successfully running for re-election in November.

Then, in a stunning reversal, Haley said in her January State of the State address that she would accept a 10-cent gas tax increase over three years. In return, she said lawmakers had to agree to cut the state’s top income tax bracket to 5 percent over a decade and reform the Transportation Department, giving the governor control of the agency.

Haley’s plan would have raised about $3 billion in new money for roads over a decade while netting taxpayers $5.6 billion in tax cuts.

Under Haley’s plan, the average taxpayer would have saved $689 on income taxes and paid $66 in higher gas taxes. More than a million low-income South Carolinians would have received no tax cut, because they do not pay income taxes, and would have paid the higher gas tax. The state’s highest-earning taxpayers would have saved an average of $145,784 a year on their income taxes.

While Haley insisted growth in the state’s economy would offset state revenues lost to her tax cuts, the governor’s numbers proved an impossible sell for Democrats and Republicans alike. Both questioned whether Haley could really count on her growth projections holding true.

“When the governor tied a massive tax reform to the infrastructure issue ... that was probably the break point,” said state House Speaker Pro Tempore Tommy Pope, R-York.

“Tax reform is extremely important. But I'm worried that saddling the two together misses the mark.”

A House plan rejected

Haley’s plan went nowhere.

In April, the House passed a roads bill, sponsored by Simrill, that would have added roughly $427 million a year in state spending toward roads. The plan included a 10-cent gas tax increase and raising the state sales tax on vehicles to $500 from $300.

The plan also included a small income tax cut, averaging $48 a year. Simrill called that a rebate to help offset the gas tax increase on S.C. drivers.

Though far lower than Haley’s proposed tax cut, Simrill said his plan would make out-of-state drivers, who use S.C. roads and pay about a third of the state’s gas taxes, pay their own way. The plan also treated S.C. residents more fairly, the Republican representative said.

“Whether you're very wealthy or not, you pay the same price for fuel” and get the same “rebate,” he said.

The House passed Simrill’s bill by a veto-proof 87-20 margin. But after that, the proposal went nowhere.

House Speaker Jay Lucas, R-Darlington, said Friday he was disappointed the session ended with the House roads plan, the only proposal that passed a chamber this year, being ignored.

“(W)e squandered a tremendous opportunity to make an impact on the No. 1 issue of South Carolinians,” Lucas said.

Senate in pieces

The first roads plan to emerge from the state Senate also helped derail the roads debate, some Republican senators say.

That plan, which came out of the Senate Finance Committee, proposed a 12-cent-a-gallon increase in the state’s gas tax, the third lowest in the nation. But the plan did not include any offsetting tax relief or reform the state’s Transportation Department.

Sen. Larry Grooms, R-Berkeley, chairman of the Senate Transportation Committee, called that plan – backed by Senate President Pro Tempore Hugh Leatherman, R-Florence, a group of moderate Republicans and Democratic state senators – a "straight-up tax increase," adding it had no chance of surviving Haley’s veto pen.

If the Senate passed the gas tax increase only, Grooms said, “We will have adopted no policy, but we will have played the politics and made some constituencies happy.”

State Sen. Vincent Sheheen, D-Kershaw, said he supported the Senate Finance proposal because it focused on raising new money for roads.

“It didn't focus on extraneous things like income tax cuts for the wealthy,” he said. “It focused on roads.”

Introducing Tom Davis

Most Republican senators, the majority in the politically fractured Senate, wanted to add income tax relief and Transportation Department reforms to the Senate Finance Committee’s gas tax hike.

But they never had a chance.

For three weeks, state Sen. Tom Davis, R-Beaufort, filibustered a state spending bill, demanding that senators not raise taxes but agree to spend more of the state’s existing revenues on roads.

In previous years, extra state revenues have been spent – in many cases, wasted – on special-interest projects, said Davis. If lawmakers just would agree to use that extra money on roads, there would be no need to raise taxes, he said.

Davis’ filibuster blocked the Senate roads bill from coming up for debate. And the fractious Senate – divided into Democrats and some moderate Republicans who oppose an income tax cut, mainstream Republicans who wanted a tax cut, and conservative Republicans who opposed any tax hike – refused to end his talk fest.

Davis said his filibuster shifted the roads issue from a debate over a gas tax increase to the state’s use of its surplus revenues, more than $300 million this year.

“Now, that money will go for roads repairs,” he said. "Leadership's hands were forced in this matter.”

Short fix for now

Lawmakers return to Columbia June 16 for three days to finish their work on the state budget that takes effect July 1.

That budget will include some new money for roads.

A proposal that House members will take up would send $150 million in one-time surplus money to counties to pay for repairs on state roads.

That’s something, but it does little for the state’s longtime road funding needs – that elusive sum somewhere between an added $400 million and $1.5 billion a year.

Business leaders want more money spent on roads.

“The business community has never been as united on an issue as it is today on the need for increased funding for our state’s crumbling infrastructure,” said S.C. Chamber of Commerce chairman Mikee Johnson, chief executive of Cox Industries. “We cannot afford to wait another year.”

Some lawmakers and roads advocates say a roads bill will be harder to pass in 2016, when all legislators will be facing re-election. But the pressure on lawmakers to act only will increase.

“Folks are just fed up from driving on dangerous roads,” said Bill Ross with the Alliance to Fix Our Roads.

The roads bill likely will be the first issue on the Senate’s calendar when lawmakers return to Columbia in January.

But lawmakers can expect heat from advocacy groups with vastly different ideas on roads and taxes.

Earlier this year, for instance, a S.C.-based arm of Americans for Prosperity, tied to the billionaire political activist Koch brothers, robo-called some South Carolinians urging them to tell their legislators that voters oppose a gas tax increase. Reforming the way the state prioritizes its road projects should be the top priority, not a tax hike, the group says.

The group “misled a lot of folks into believing that all we were interested in doing was growing government so we could create bicycle trails and light rail and bridges to nowhere,” said state Sen. Larry Martin, R-Pickens.

Other advocacy groups will be pushing lawmakers to come up with a compromise that involves higher gas taxes, Transportation Department reform and some offsetting tax cut.

With elections right around the corner in November 2016, lawmakers would be “well served,” said the S.C. Chamber’s Pitts to pass a bill that provides long-term funding for roads, reforms the Transportation Department and “makes our state's tax structure more competitive.”

Pitts said lawmakers should think hard about their answers to the question: "What did you do for our infrastructure?”

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Road to nowhere

How the effort to repair S.C. roads and bridges – the top legislative priority issue this year – fell apart

Sept. 16: A House committee, formed by new House Speaker Jay Lucas, R-Darlington, meets for the first time to come up with a road funding plan. Chaired by state Rep. Gary Simrill, R-York, the panel works on a plan that does not include a gas tax increase, which Gov. Nikki Haley had said she would veto. Simrill later says he tried to get input from the governor’s office on what she would accept, but received little guidance.

Jan. 21: Haley unveils her roads funding plan during her State of the State address, surprisingly offering to support a 10-cent-a-gallon gas-tax increase but only if lawmakers agree to cut the state’s top income tax rate to 5 percent from 7 percent and reform the Transportation Department, giving the governor control of the agency. Legislators never vote on Haley’s proposal, which would have cut state revenues by far more than it raised for roads.

March 24: A House panel OKs a roads proposal, increasing the state’s gas tax by 10 cents a gallon and the state’s cap on its vehicle sales tax to $500 from $300. The same day, Haley signaled her opposition, sending letters to House and Senate leaders, saying the House and Senate roads proposals amounted to "a massive tax increase" on South Carolinians.

March 26: The House’s budget-writing committee passes a roads plan, adding an income tax cut saving the average taxpayer $48 a year.

April 15: The full House passes its roads proposal with enough votes to override a promised veto by Haley.

April 28: A divided Senate Finance Committee votes 15-8 to replace the House road-repair plan with its own proposal. The Senate plan would raise more money for roads – roughly $800 million a year versus $427 million. It also proposed increasing the gas tax more – by 12 cents a gallon and hiking other fees. That plan does not include an income tax cut or Transportation Department reform.

May 7: A group of Senate Republicans introduces a fourth major road repair plan, less than a month before lawmakers are scheduled to go home. The plan keeps the Senate Finance Committee’s tax hikes but also cuts income taxes by $700 million and gives control of the Transportation Department to the governor.

May 20: State Sen. Tom Davis, R-Beaufort, begins a three-week filibuster on how the state should spend $85 million from a savings account. Davis’ filibuster effectively blocks senators from debating the roads bill for the rest of the session. Davis says using savings account money and money from state surpluses this year – roughly $322 million – and in the future would eliminate the need for a gas tax hike.

June 4: The 2015 General Assembly adjourns its regular session without a long-term plan to fix the state’s roads. A surplus spending plan proposes spending $150 million in onetime money on state roads. That plan still needs the approval of the House and Senate when lawmakers return for a three-day special session on June 16.

Staff writer Cassie Cope