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Haley says her roads plan is about needs, not wants

Author: Tim Smith

Source: Greenville Online

January 29, 2015

COLUMBIA – Gov. Nikki Haley says her plan to fix the state's crumbling infrastructure isn't about building new roads but about bringing existing roads "up to par."

Haley also said Wednesday that while she appreciates the work that went into a road-funding plan passed by a House infrastructure panel Tuesday, she considers using an excise tax as part of that plan "dangerous."

Meanwhile, some House Democrats labeled Haley's plan as "ill-conceived" and accused the governor of "holding hostage" a gas tax increase in order to reduce the state's income tax rate.

Haley proposed to the Legislature last week that the state's gas tax be raised by 10 cents over three years, provided lawmakers first agree to scrap the current highway commission and reduce the state's income tax from 7 percent to 5 percent over 10 years.

The governor has sought the public's help in lobbying for her plan and said she will insist on the pairing of the gas tax increase with the income tax cut. She brought three cabinet agency directors forward Wednesday to publicly tout the plan.

"This is something I know will work," Haley said. "The idea that the sky is falling is for people who don't want to see change. That's not South Carolina any more."

A House infrastructure panel on Tuesday passed a plan that would cut the 16.75-cents-per-gallon gas tax by 6 cents and place a 6 percent excise tax on gas at the wholesale level, a combination that would mean 4 cents per gallon more if gas were selling for $2 per gallon, said Rep. Gary Simrill, chairman of the House infrastructure panel and the plan's architect.

The proposal also would increase the sales tax cap on vehicles from $300 to $500.

Counties would be asked to take back local roads in state inventory over three years under the House plan.

Each county would get $1 million and the amount of fuel tax that is sent to local governments would increase eventually from 2.66 cents per gallon to 6.5 cents under the plan.

Asked about the House plan Wednesday, Haley said there were a couple of things about which she didn't agree.

"Indexing (the excise tax) is a dangerous road that I would not go down because once you index you lose all control for the people of the state," she said.

"But we'll keep talking with them and see what they want to do. I appreciate that they are trying to move our way and we will continue to see how we can help them get there."

Simrill said part of the proposal would include a cap on the state taxes so motorists would never see more than a net 10-cent increase in the fuel tax. He said the combination is what South Carolina's neighboring states use and was also recommended several years ago by a tax reform panel.

Haley and State Transportation Secretary Janet Oakley said the $394 million a year Haley said will be raised by the governor's plan isn't a panacea for the state's infrastructure issues but an attempt to repair what's broken.

"We're going to get it up to par and make sure there's enough money to maintain it," she said.

"Then let's have a conversation about whether it's going to be I-26 or I-95 or whether it's going to be I-73 or anything else. Let's have a targeted conversation on that, rather than just say let's raise it because we can and then figure out how to spend it later."

The state Department of Transportation, which Oakley leads, last year projected the state's transportation funding shortfall at $1.4 billion a year until 2040.

But Oakley said that figure includes new roads, interchanges and road expansions. She said the state's first step needs to be restoring the system.

"This isn't about wants," Haley said. "This is about needs."

But Rep. James Smith, a Columbia Democrat, said the governor's plan is more a tax-relief plan.

"I think it's wrong for this governor to hold a roads plan hostage in favor of some tax scheme that clearly favors the most wealthy in South Carolina at the expense of working families who would see an increase in the gas tax but get no benefit from what the governor purports to do."

Smith said he doesn't believe the plan will "see the light of day" as legislation or "be given any serious consideration" by legislators.

Democrats have argued that the income tax reduction part of Haley's plan would grant 379 tax filers who have taxable income more than $2 million with an average benefit of $145,000.

More than 1 million filers, many of whom are on fixed incomes, won't pay any tax and therefore not benefit from the tax cut, according to the Democrats.

Those with incomes of between $30,000 and $40,000 would get an average benefit of $948, the Democrats argue.

Haley said the state is growing, which will produce the surpluses needed to pay for the tax cuts, which she said are being stretched over 10 years to make them manageable for the budget.

She said again Wednesday the cuts are necessary to keep the state competitive with other states in the Southeast.

Rep. Russell Ott, a Calhoun County Democrat who sat on the infrastructure committee, said his constituents aren't interested in a plan that merely brings the system up to par. He said the state should be focused on building a good road system, not patching potholes.

Haley said the plan will get a House sponsor and lawmakers her office has talked to like it and "want to know how to get there."

Simrill said he plans to talk to both the House GOP and Democratic caucuses about the infrastructure committee plan next week, which eventually will be drafted as a bill and sent through the committee process.

 

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