Throwback Thursday: Lawmakers talking about “being creative” to find more STIB funding

August 22, 2019

Inside Insight

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Repaving road

During a State Transportation Infrastructure Bank (STIB) board meeting this week, Sen. Hugh Leatherman directed his staff to explore the STIB’s options for building/expanding interstates. In response, fellow board member and ex-Rep. Chip Limehouse remarked that if the STIB plans to tackle interstates, it will need more revenue and should be “creative” in locating new sources of funding.

This is significant, as the last time lawmakers “got creative” with a funding source for STIB revenue bonds, they violated the state Constitution – which says that revenue bonds must be guaranteed by the revenue stream of a government agency, rather than being backed by taxpayers. Since the STIB does not have an independent revenue stream (other than the returns on loans made to local governments), lawmakers created one by (among other things) renaming the gas tax a “fee” and funneling a portion of those funds to the STIB for revenue bonds.

Lawmakers doubled down on this unconstitutional practice by designing the 2017 gas-tax-hike law with a clever loophole allowing more gas tax revenues to be diverted to the STIB, despite their promises that the funds would be used solely to repair and maintain existing roads. This week’s throwback is a reminder that the legislative leadership’s goal has all along been aimed at interstate expansion; and that more importantly, lawmakers’ schemes to find new funding sources usually involve raising taxes or fees somewhere, and won’t necessarily follow the state Constitution in the process.

Gas Tax Bill a Windfall for Infrastructure Bank

PROPONENTS CLAIM THE BILL WOULD FIX SOUTH CAROLINA’S ROADS. THAT’S NOT WHAT THE BILL SAYS.

[NB: The bill discussed in this report is now law, the state senate having overridden the governor’s veto.]

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.

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