This week, the Senate will begin debate in hopes of reaching an agreement on the long overdue solution to fix our state’s crumbling roads. My position has been clear from the start, the best way to accomplish this is to ensure dedicated funding is in place so that the private sector can be quickly mobilized to get the job done.
The funds, however, should not come from the state’s general fund as this places the financial burden squarely on the backs of our own citizens. We must not settle for the easy solution, but rather demand the wise solution.
A fair and efficient source for this dedicated funding is the motor fuel user fee. A significant portion of this tax, nearly 30 percent by the most recent report, is paid by out-of- state drivers. In a state where that discrepancy in resident vs. nonresident funding exists, it is irresponsible to ignore a funding mechanism to exploit that advantage. Sharing the cost of road repair with those who contribute to the disrepair, via a user fee, is an appropriate solution. But, it should not be used in isolation.
I believe that South Carolina government is adequately funded. I also believe that our roads program and several other core government functions are not. This great dichotomy provides us with a unique opportunity to reset our spending priorities and instill fiscal discipline to better align our needs and shortcomings with the appropriate resources.
The best solution is a three-pronged approach. Following on the significant DOT reforms of 2016, we should concentrate on the second and third prong by first gradually raising the motor fuel user fee by two cents per gallon, per year, for six years. Simultaneously, we should make reasonable and impactful reductions to the rates paid by all South Carolina income tax payers, while also implementing additional targeted income tax reforms for low and middle income earners.
Those who subscribe to “no new tax” dogma should take comfort that by shifting to a consumption based tax on motor fuels allows for the reformation of our tax policy to a more efficient and growth-oriented model where consumers have more control over their financial well being. Additionally, the income tax reforms and reductions provide for a mechanism to control accelerating government growth by reducing general fund collections.
Conversely, some may argue that by reducing taxes, we also reduce vital functions such as education and public safety. Those people should be reassured to hear that general fund revenues are projected to expand by nearly five percent, year over year, for the foreseeable future. The tax reform changes recommended here, represent using a portion of that growth. This will leave sufficient funds to be expended on core and vital governmental functions.
At the conclusion of the next few weeks of debate, the General Assembly should finalize and deliver a meaningful plan to fix our roads and strengthen our economy. That plan should include significant reforms that add to the efficiency, transparency, and accountability within DOT. The plan should also establish a dedicated funding source to improve, not just preserve, current road conditions. And finally, it should allow our citizens to keep more of their hard earned money while controlling the growth of unnecessary government spending and focusing on those areas that are most important.