NEWS

Budget leaders don't yet support Haley's tax plan

Tim Smith
tcsmith@greenvillenews.com

COLUMBIA – More South Carolina motorists would travel on good roads if lawmakers enact Gov. Nikki Haley's tax and roads plan, but legislators may have to decide in advance what services they would cut if growth projections that would support an income tax cut fall short.

Haley's plan calls for an increase in the gas tax of 10 cents per gallon, but only if lawmakers also enact a reduction in the state income tax from 7 percent to 5 percent over 10 years and also scrap the current state highway commission system.

A week after Haley's plan and a roads plan crafted by the House infrastructure committee were introduced, lawmakers still have plenty of questions and the governor's plan has yet to sway the Legislature's two top finance officers.

State Transportation Secretary Janet Oakley on Wednesday gave a briefing to senators, while House Ways and Means Committee Chairman Brian White of Anderson talked numbers to a closed meeting of House GOP caucus members.

"The one takeaway is that everyone is committed to doing something to fund fixing the roads and addressing that issue," House Majority Leader Bruce Bannister of Greenville said afterward.

Oakley released projections showing that if Haley's plan was enacted, the $394 million raised annually would change the amount of good and bad roads in the state.

According to those projections, the amount of pavement on primary roads rated in good condition would double and the percentage of traffic riding on good roads would swell to 48 percent from the current 29 percent.

But White noted that the growth assumptions used in the tax cut part of the plan may fall short. In 40 percent of the years in the past decade, White told legislators, state revenue growth did not meet the 4 percent rate assumed for the income tax reduction plan.

Bannister said in the briefing White told legislators if they want to adopt the governor's plan, they should make choices now about what services they would cut if revenue does not meet projections.

Haley has said she believes future growth will pile up enough revenue surpluses to fund future tax cuts.

Neither White nor Senate Finance Committee Chairman Hugh Leatherman are backing the governor's plan. In fact, White signed as a co-sponsor of the House infrastructure committee's roads bill, which was introduced on the same day as Haley's bill and proposes a different way of funding road improvements.

Leatherman, who also serves as Senate president pro tempore, told The Greenville News that lawmakers need to find additional revenue for the state's roads.

"Parts of that bill, I won't be supporting," he said, referring to the governor's proposed income tax reduction. "According to the information I have received, at the end of 10 years, when it's fully phased in, we'll hit the General Fund for $1.8 billion. We've got lots of needs in this state that are not being met."

Asked about Leatherman and White's views Wednesday, Haley said it's up to the Legislature to act.

"We put it out there," she said. "It's up to them. I'm not going to approve anything above 10 cents. I'm not going to take a bill that doesn't have a tax cut in it and I'm not going to take a bill that doesn't have restructuring in it."

Bannister, who has signed as a co-sponsor of the governor's plan, said both bills are just getting started in the legislative process. He said several other road plans are in the works by House members.

"I think it's too early in the process to say that any bill can't be adjusted to have the support of both the Senate and the House," he said.

Bannister said he thinks many in the House want to find a plan that will not draw a veto from the governor.

"It's really just a political decision about which of the two should be the framework from where we start," he said, "acknowledging a lot of the ad hoc committee's work and ideas will go into the final product and acknowledging that the governor's framework will have a lot of additional things put in it and attached to it. So which of the two bills goes forward doesn't matter as long as we reach a bill that won't be vetoed and addresses the roads issue."

The House infrastructure committee, meanwhile, has proposed a cut in the 16.75-cents-per-gallon gas tax by 6 cents and that a new 6 percent excise tax be created on gas at the wholesale level, a combination that would mean 4 cents per gallon more if gas were selling for $2 per gallon, the chairman of that committee has said. A ceiling would be set so that the total tax could never exceed 26.75 cents per gallon.

The proposal also would increase the sales tax cap on vehicles from $300 to $500.

Haley has called use of an excise tax "dangerous" and has publicly urged House lawmakers to back her plan.

House Speaker Jay Lucas, who created the House infrastructure panel, has signed as a co-sponsor of the panel's bill. The bill has a total of 64 lawmakers signed as sponsors. There are 124 members in the House.

The governor's plan has 40 sponsors. Some have signed onto both bills.

Rep. Tommy Stringer of Greenville, who is the chief sponsor of the bill that is Haley's plan, said White has previously told the caucus that he doesn't think the numbers work for the governor's plan.

"I guess my question would be, the numbers don't work for whom?" he asked. "The state or the taxpayers? Are they saying it's too much of a tax cut? I wasn't elected to protect the state. I was elected to protect the taxpayers."

Stringer said the House Ways and Means has passed legislation in the past where "the numbers haven't worked."

"They have given growth projections on things that have had a major impact on our budget to the detriment of taxpayers and they seem to forget about that, conveniently," he said.

Stringer said he thinks the governor's plan is a simple approach that people can understand.

He said he sat through three meetings on the House infrastructure committee bill "where they could not explain it to me."

"And if they can't explain it to me, how can the taxpayer understand it?" he asked.

Both plans would raise about $400 million a year for roads.

Bannister said House GOP leaders hope the caucus can agree on a plan to support before budget debate begins March 9.