We need good roads, not a tax cut

Gov. Nikki Haley’s stubborn refusal to consider raising revenues to fix state roads is a disservice to the state and its residents on many levels.

Lawmakers in both the S.C. House and Senate are working to put together plans that would raise money for desperately needed road repairs. While both chambers would temper any tax or fee increase with cuts elsewhere, neither plan would be revenue neutral nor would it include the enormous income tax cuts that Haley demands.

In a letter she sent to the House and Senate Tuesday, Haley told members she would veto any plan “that increases gas taxes without a significant cut to income taxes,” with the threat in bold print and underlined.

While Haley’s plan would raise the state gasoline tax by 10 cents, it would lower income tax rates by 2 percentage points. At the end of 10 years, when the tax cut would be fully phased in, it would cost the state $1.8 billion a year, which would come directly out of the general fund.

The state has a mandate from the S.C. Supreme Court to address inequities in the quality of education in poor, rural school districts. It under-funds higher education. It has too few state troopers. It has too few caseworkers at the Department of Social Services. And those are only a few items on a long list of unmet needs.

Draining hundreds of millions of dollars from the general fund so that wealthier South Carolinians can get a windfall on their income taxes makes no sense on its own merits and certainly has no place in a plan to fix state roads.

Haley’s natural constituency for tax cuts – the state’s business community – has abandoned her on this proposal. Executives are savvy enough to know that good roads are an essential component to good business.

A group of several dozen state businesses called the South Carolina Alliance to Fix Our Roads wants the House to find even more money for highways than it is considering now. The alliance fears that revenues produced by plans now being considered in the Legislature would do little more than allow the state to manage the further decline of its highway system.

And that could have a chilling effect on economic development. Pete Selleck, chairman of Michelin North America, has called state roads a disgrace and said the company might look elsewhere to expand if nothing is done to fix them.

The state’s gas tax hasn’t been increased since 1987 and now is the third-lowest in the nation. Raising that tax alone would not come close to raising the $1.5 billion a year the state Department of Transportation estimates it would need to reduce the backlog on road repairs.

But an increase in the gas tax – or, as the House plan proposes, lowering the tax by 10 cents a gallon while raising the sales tax on fuel by 6 percent – could be a sensible part of any road plan. And more money could be raised by increasing fees on driver’s licenses, car tags and other items, while raising or eliminating the senseless cap on sales taxes for auto purchases.

And it’s not only business owners who are calling for road repairs. A recent Winthrop University Poll indicated that more than half of the state’s residents would support raising the gas tax by 10 cents a gallon if the proceeds were dedicated to road repairs.

A number of lawmakers say that, faced with a certain veto by Haley, they are tempted to pass their plans anyway and let her suffer the fallout. That’s not exactly a valiant show of statesmanship, but, under the circumstances, it might be the only option for those not willing to knuckle under to Haley’s demands for a huge income tax cut.

Unfortunately, it wouldn’t simply be Haley who suffers the consequences. It would be the entire state and all the drivers forced to navigate its crumbling roads.

This story was originally published March 26, 2015 at 6:45 PM with the headline "We need good roads, not a tax cut."