Gas tax hike: Millions collected, but rough roads remain in S.C.

March 21, 2018

Investigative Reports

Print Friendly, PDF & Email

By RICK BRUNDRETT

Nearly nine months after the state law took effect hiking the gasoline tax and other taxes and fees – purportedly to fix South Carolina’s crumbling roads – the authorized money has yet to be spent, though more than $131 million has been collected.

At least that’s what online records from Comptroller General Richard Eckstrom – the state’s chief accountant – show so far. Eckstrom’s office announced that it would track the funds after citizens demanded accountability for the money lawmakers promised to spend on road repairs.

The S.C. Department of Transportation also posts an accounting of the dollars in the Infrastructure Maintenance Trust Fund (IMTF), which state lawmakers created last year to receive the new revenue, including the six-year, 75-percent gas tax increase. The new law took effect July 1.

But DOT paints a much different picture of the fund than that of the comptroller general.

DOT contends a total of $17 million from the fund was sent to counties for road projects, and that the IMTF balance as of Jan. 31 was about $91.6 million – $40.3 million less than the balance listed by Eckstrom’s office.

The Nerve’s review of the $17 million found that the payments were through a program established under previous state law, and that the allocations to counties were based on an amended formula using 2015 gas tax collections in counties – not on the revenue increases that took effect July 1.

And even if the $17 million can be legally drawn from the IMTF, it represents less than 13 percent of the $131.9 million balance listed by Eckstrom’s office as of Jan. 31.

DOT’s website also claims – in red – that the IMTF is short by more than $78 million to meet nearly $170 million in “project commitments” statewide.

The Nerve this month contacted four counties – Charleston, Greenville, Horry and York – that collectively were awarded more than $10 million of the $17 million that DOT records show was transferred to counties. The four counties confirmed their respective award amounts and provided lists of approved projects that they indicated would be funded in whole or in part with the money.

None of the counties, however, in written responses to The Nerve said any major road projects have been completed, though the state law has been in effect since July 1.

“Those roads are beginning to get paved now,” said Jeff Hilderbran, president and CEO of CoTransCo, which manages “donor bonus” projects for the Greenville Legislative Delegation Transportation Committee, in a March 9 email to The Nerve. “Money arrived in late fall. … No paving can occur in winter, so it is beginning now.”

Under S.C. law, county transportation committee members are appointed by that county’s state legislative delegation, which can recommend projects to the committee.

The Nerve in late February and early this month first contacted Eckstrom’s office and DOT about discrepancies between the agencies over how much money has been collected and spent so far under the gas-tax-hike law. The two agencies stand by their respective figures, which are listed on their websites (here and here), attributing the differences mainly to when they compiled their information.

But the agencies disagree with each other over whether the new law allows the $17 million in payments from the IMTF to county transportation committees (CTC) under the “donor bonus” program, which allows counties to receive rebates of a portion of gas tax collections above revenues allocated to them, based on a state formula.

“With respect to those CTC funds, the issue you have raised about the $17 million is one we have been pursuing with the S.C. Department of Transportation,” Eckstrom said in a written statement Friday to The Nerve. “It does not have a clear-cut answer at this point, and we are still working to obtain some clarification on it. It comes down to an interpretation of the law.”

On the other side, DOT “believes that the legislative intent was clear when as a part of Section 11 of Act 40 (the gas-tax-hike law), the dollar amount of the Donor Bonus (program) was set and allowable as a part of the IMTF transfer,” DOT spokesman Pete Poore said in a March 5 email to The Nerve. The law increased the total statewide annual cap under program from $9.5 million to $17 million.

Eckstrom in his statement Friday said his staff met the day before with DOT representatives to “discuss these matters and we are looking forward to continuing to work together to provide meaningful financial transparency to the public.”

In an email today to The Nerve, Poore said his agency and Eckstrom “agreed to align timing of the reports’ cut-off dates in order to generate comparable results between the two agencies.”

Taxpayer shell games?

Under Act 40 of 2017, which the Legislature passed in May, overriding Gov. Henry McMaster’s veto, the IMTF “must be used exclusively for the repairs, maintenance, and improvements to the existing transportation system.”

The same law, however, allows the DOT Commission, whose members are appointed by the governor and confirmed either by legislative delegations or the Legislature as a whole, to commit funds to pay down debt up to the limits set by the S.C. Constitution.

The South Carolina Policy Council, the parent organization of The Nerve, has contended that the law was written in a way to allow DOT to divert IMTF revenues to pay bond debts of the State Transportation Infrastructure Bank, which over the years has funneled several billion dollars for road projects in a small number of select counties.

Among other things, the law imposes an annual 2-cent gas tax hike on top of the base 16 cents for six years, plus creates a new “infrastructure maintenance fee” by raising the old sales-tax cap on vehicle sales from $300 to $500. It also increases various biennial vehicle registration fees by $16 and imposes new “road use” fees on electric and hybrid-fuel vehicles.

Most of that revenue is earmarked under the law for the IMTF. Comptroller general and DOT online records each show that $108.6 million in revenues was collected – made up mainly of $31.3 million from the 2-cent increase and another $76.5 million in infrastructure maintenance fees.

But the comptroller general’s website and records provided to The Nerve from the state Treasurer’s Office, which by law manages the IMTF, show the $108.6 million balance at the end of December, while DOT contends that amount was the total collected as of Jan. 31. Comptroller general records show an additional $23.3 million in receipts was collected in January, bringing the ending balance then to $131.9 million compared to nearly 91.6 million listed by DOT.

In his written statement Friday to The Nerve, Eckstrom said the differences between the agencies’ online figures “relate to their cutoff date.”

“DOT cuts off right after the end of the month,” Eckstrom said. “This office waited several days after the end of the month to allow for and capture adjustments by the agencies that are collecting and remitting revenues to the IMTF.”

“We are working cooperatively with DOT on this issue in an effort to report matching figures,” Eckstrom added.

DOT gave a similar written explanation earlier to The Nerve.

In drafting the gas-tax-hike law, state lawmakers in the act’s introduction said the new revenues would “provide the Department of Transportation with addition resources,” though they also acknowledged that it would “place an additional financial burden on the State’s taxpayers.”

Whether motorists will see any real benefits when they drive on the 41,000-plus miles of state-maintained roads remains to be seen.

Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 

 

 

 

 

 

 

 

 

 

 

 

 

Comments are closed.