Out of State Drivers Pay 30 Percent
February 3, 2016
By Bill Ross, Executive Director of the South Carolina Alliance to Fix Our Roads
This past week the Senate Finance Committee met to discuss the status of a bill to improve South Carolina’s roads. The committee is also considering cutting nearly $400 million in income and business taxes. The funding amendment currently being discussed would raise the motor fuel user fee/gas tax by 12 cents over three years. At full implementation the motor fuel user fee would raise $442M in year 2018-19.
The Department of Revenue recently confirmed that out-of-state residents pay one-third of our motor fuel user fee/gas tax, which would equal $133M of the $442M in new funding. Also, an additional provision would increase out-of-state revenues by $13M in year 2018-19. The total amount derived from out-of-state motorists would equal $146M in additional revenue.
Even with this reality, there is a small group of lawmakers who are adamantly opposed to increasing any fees. These senators are demanding the General Assembly use funds from the projected $1.3 billion surplus revenue to fund road repair. Their approach would put the entire burden on South Carolinians, rather than allowing out-of-state motorists to share the burden.
Worse, their proposal to use surplus revenue is not guaranteed to address the state’s long-term road needs – estimated to cost upwards to one billion annually for the next 30 years. This past year’s budget growth was 6.5%, that is twice the average growth rate of the last 25 years. So, that rate is historically considered unsustainable.
When analyzing our infrastructure needs, it is impossible to both fund and plan these hugely expensive projects without additional certified recurring revenue. The majority of the state’s revenue growth is coming from South Carolinians in the form of sales tax, income tax and corporate income tax. These funds finance core government services, predominately education, healthcare, public safety, and social services. However, roads and bridges are funded through motor fuel user fees/gas tax, and do not receive substantial funding from the General Fund. When it comes to road funding, it is simple. The more you drive the more you pay; if you don’t drive at all, you don’t pay at all – same goes for out-of-state motorists.
Once the proposed higher gas taxes and fees that would be paid by out-of-state residents are factored out, the increased cost to South Carolinians would be nearly balanced out from proposed tax reductions.
Essentially, the proposal before the Senate Finance Committee would fund roads directly by increasing user fees. And also make use of recurring surplus money to support tax reductions. This is better budgeting and long-term fiscal policy.
The political game being waged by some legislators opposing an increase in our motor fuel user fee/gas tax hurts the people of South Carolina. South Carolina citizens must encourage their legislator to act fiscally responsible and follow Ronald Reagan’s principles: general taxes for general services, user fees for specific uses.
Bill Ross is Executive Director of the South Carolina Alliance to Fix Our Roads. He is a life-long SC native and active in the broad based industry and highway user Coalition for Road and Bridge Improvements.
