Throwback Thursday: Lawmakers eyeing gas-tax-hike dollars for interstates, more debt

October 17, 2019

Inside Insight

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Repaving road

At Wednesday’s state Senate Finance subcommittee meeting to discuss expanding interstates, Sen. Nikki Setzler, D-Lexington, asked S.C. Department of Transportation Secretary Christy Hall, “Is there anything to prohibit you from using any of this (Infrastructure Maintenance Trust Fund, i.e. gas-tax-hike revenues) money to bond?”

Hall replied the state could not do it pending a legal challenge to the gas-tax-hike law, implying that – despite legislative promises that the funds would be used only to repair existing roads – the law is, in fact, set up to allow gas tax dollars to be bonded for expanding interstates.

When the law was being debated, the South Carolina Policy Council, the parent organization of The Nerve, warned about this very thing, pointing out the bill contained a loophole allowing the new funds to be diverted to debt service. Since then, The Nerve has regularly reported how much revenue the gas-tax- hike law has raised and how those dollars have been spent.

What this scrutiny has revealed is that although none of the funds has as of yet been diverted to debt service, relatively little road work has been completed over the two years since the gas tax hike took effect – despite monthly large cash balances.

This week’s throwback is a reminder that despite legislative promises to the contrary, the gas-tax-hike law was never about just fixing your bad roads.

Gas Tax Bill a Windfall for Infrastructure Bank

The legislature is poised raise the gas tax, along with sales tax on vehicles and several registration fees. Proponents claim the 72 percent tax hike will be used to repair damaged roads and bridges, but the bills passed by both House and Senate don’t guarantee that. In fact, the legislation sets the stage for most of the new revenue to be diverted to the State Transportation Infrastructure Bank, or STIB.

How the gas tax hike could end up as a bailout for the controversial STIB is a matter of legislative maneuvering. If lawmakers wanted to raise taxes and use the revenue for road repair and maintenance, the bill could have quickly and cleanly directed dollars to the Department of Transportation for the sole purpose of repairing roads and bridges in order of priority. Instead, the bill shifts language – and dollars – in a way that’s deeply complicated.

There are three major red flags in both the House and Senate bills that signal the intention to use the money for projects bonded by the STIB: changing taxes to “fees,” shifting revenue streams from the Department of Revenue to the Department of Motor Vehicles (DMV), and creating a new “trust fund” from which dollars can be directed to paying down bond debt. Those convoluted maneuvers, given the legislature’s history in this area, signal trouble even beyond the impact of the tax hike.

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