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The Governor’s Highway Funding Plan – A Response

We rarely witness the appearance of a political crisis simple enough to be understood by a majority of voters and large enough to evoke substantial change in the size and scope of government.

South Carolina’s crumbling road system and the lack of revenue to repair it has become that crisis. It threatens our safe travel, our economic competitiveness and presents taxpayers with an exponentially increasing, and unnecessary, cost to fix the problem.

During her State of the State address to the General Assembly last week, Gov. Haley unveiled a three-point strategy to end the crisis.

Her first point was expected. She asked that the Department of Transportation become a true cabinet level agency responsible to the Governor and that the district-based commission structure be abolished. She understands that the current structure lacks accountability, encourages inefficiency and props up our antiquated regionalism that limits the responsiveness of DOT and harms statewide economic development.

Her second point was courageous. She admitted that a gas tax increase would be required to repair our roads. After realizing that the majority of voters understand this simple truth much better than their elected members of the General Assembly, her admission created an anvil upon which her other two points can be forged.

Her third point was prescient. She redefined the gas tax increase as tax reform, most particularly the reduction of our personal income tax rates. Her critics should remember that including the gas tax as part of a tax reform package was recommended in the TRAC report back in 2010. For a reminder of the hard work put in by that commission, please look here. Their gas tax recommendations can be found on page 214.

Though I do not agree with all of the solutions found in the report, it does give us an idea of what can be done with our tax policy. The report recommends a blending of Gov. Haley’s suggested gas tax increase and the hybrid funding approach suggested by the House Transportation Study Committee led by Rep. Gary Simrill. The report suggests ways to flatten our tax brackets, broaden our tax base and remove exemptions. Like Gov. Haley, I add the reduction of income tax rates and sales tax rates to that list.

If we truly want South Carolina to be a 21st century economic force, as every politician claims, we must stop clinging to our 19th century regionalism – I am talking to the Senators here – and our restrictive 20th century tax code – pay attention House members.

I applaud the window of opportunity that Gov. Haley has opened for the General Assembly. We should allow this unexpected and fresh breeze to blow the cobwebs of apathy and recalcitrance from our minds.