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Road Funding Options Limited

This piece originally ran in The Greenville Journal –

The historic Poinsett Bridge, located in Northern Greenville County where I hail from, serves as a 200-year-old reminder that Greenville’s economic success began with a sound road system.

Designed by Robert Mills, the stone bridge was part of the Saluda Gap Road linking Greenville to Charleston and Western North Carolina. Mills, who also designed the Washington Monument, served on the state Board of Public Works. Joel Poinsett, state representative from Charleston, diplomat and eventual Secretary of War under Martin Van Buren, served as board president.

The board, a precursor to our Department of Transportation, was created when the General Assembly appropriated $1 million in 1818 to construct a system of statewide roads. Even then, we understood the link between infrastructure and economic development. Today, that initial investment has evolved into a state infrastructure system valued at $320 billion covering over 41,000 miles.

While our infrastructure has expanded dramatically since 1818, the tax revenue to maintain it has not. The DOT currently estimates a $29.3 billion revenue shortfall to cover maintenance costs over the next 20 years. This estimate does not include new project costs. We are facing a crisis and the General Assembly has limited options to substantially increase funding for DOT. None are pleasant for the taxpayer.

We could do nothing. This has been the option of choice since the 1987 gas tax increase signed by Gov. Carroll Campbell. Inactivity only adds to the future cost of deferred repairs and prevents expansion necessary for future economic growth.

We could issue more debt. Gov. Haley signed a $500 million bond bill earlier this year that offers some relief. This amount equals one year’s shortfall and the logic of issuing debt before addressing the gas tax, though politically savvy, appears backward. Remember, this type of logic has given us a $17 trillion national debt.

We could raid the General Fund. Shifting money to the DOT, which already has a dedicated revenue stream, punishes the narrow group of taxpayers who pay a disproportionate share of taxes. Almost 41% of our individual income tax filers pay no taxes due to exemptions and deductions. Our sales tax code contains over 80 exemptions. We do not have a fair tax system feeding the General Fund.

Which leaves the gas tax – or as it known in Columbia, the motor fuel user fee. Currently, motorists pay 16.75 cents on every gallon purchased. Unlike ad valorem taxes such as a sales tax, the fee does not fluctuate when the price of fuel changes. As a broad consumption-based fee, it links the responsibility for road repair to those who actually use the roads.

As part of my tax reform initiative this legislative session, which included several tax relief bills, I designed a stable indexing formula to raise the fee with built-in caps to avoid a massive increase in any one year. To avoid funds being diverted, the bill directs all new revenue to the State Highway Fund exclusively.

Considering that I have never voted for a tax increase, I was reluctant to introduce this bill. However, as a steward of state resources, I cannot watch our $320 billion infrastructure investment continue to decline. After determining that the other funding options are even more harmful to the taxpayer, raising the fee became the obvious choice.

To my colleagues who disagree, I challenge them to present a viable long-term funding solution for the DOT that does not raid the General Fund or burden future generations with debt.  I suspect that after the damaging reality of these other options become apparent, we will be left adjusting the motor fuel user fee.