Tuesday, May 16, 2017

Get the scoop on the roads bill

By Scott Slatton, legislative and public policy analyst
After three years of trying, the South Carolina General Assembly adopted a state road funding plan last week. While that’s not necessarily news this week, the effects of the plan’s passage will hopefully make news in your city or town in the coming years. Get more details on the bill in last week’s From the Dome to Your Home. 

Senate Transportation Committee considering the 12 cent gas tax
South Carolina’s motor fuel user fee (the gas tax) will rise by a total of 12 cents by 2022, which will generate upwards of $350 million in new money for repair and maintenance of state roads. Unlike other pots of road money that may be diverted to other uses, these new funds will be placed into a trust fund that may only be used for “. . . repairs, maintenance and improvements to the existing transportation system.”

Importantly for cities and towns, the new law increases funding for the C Fund by about half over the next six years, eventually reaching approximately $115 million. That’s about $40 million in new money that cities and towns can seek from their County Transportation Committees for projects on state roads within their boundaries.

The new law adds a seat to the SCDOT commission, bringing the total to nine members. It allows the governor to appoint the commissioners with the advice and consent of the General Assembly. And the law allows the governor to remove SCDOT commissioners without the approval of legislators. This is a significant departure from the past when commissioners were essentially immovable by anyone unless they committed a crime.

To get an increase in the gas tax the General Assembly had to wade into tax policy by creating a menu of new tax credits to help South Carolina residents offset the additional tax they will pay at the pump. The tax policy change that cities and towns should pay attention to is the reduction in the property tax assessment ratio for manufacturers.

The manufacturing property tax assessment ratio will drop from 10.5 percent to 9 percent, but the General Assembly has set aside up to $85 million to offset the potential decrease in property tax revenue to cities, counties and schools. 

The Revenue and Fiscal Affairs Office estimates it will take at least ten years before the offset reaches $85 million. And if it does, there is a circuit breaker provision in the law that will not allow the potential loss of property tax revenue to exceed the $85 million.

The law takes effect July 1, but don’t look for work to start right away. As SCDOT Secretary Christy Hall testified frequently at the General Assembly, it will take some time for contractors to staff up and mobilize for the work the new money will generate around the state.

In the meantime, thank your legislators if they voted for the new law. And maybe thank a summer tourist while he’s filling up in your town for helping us take care of our roads.

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