More than just a gas tax increase will be on the table when a prominent South Carolina Senate committee considers how to pay for a backlog in road repairs. But at least one group (and even a few senators) are questioning if the move is even constitutional.
The Senate Finance Committee is scheduled to take up the Collective Road Act on Tuesday afternoon. The measure by State Sen. Ray Cleary, R-Georgetown, would be the product crafted by the Transportation Funding Subcommittee that he chaired. The panel, whose five members have previously expressed support for a gas tax hike, voted unanimously for the package last week.
Gov. Nikki Haley has already warned she will veto any legislation that tries to raise the gas tax without a corresponding reduction in income tax rates. Cleary said he will try to push on with the idea anyway. “The committee needs to look inward and see what we can get through… and we have to craft our own plan,” he said. “At the end of the day, what’s important is that in June the Senate is not held responsible for roads not being fixed.”
However, the legislation is raising constitutional concerns. South Carolina’s 1895 constitution requires any bills dealing with revenue (including new taxes) to originate in the House of Representatives. Cleary questioned if classifying the changes as “fee increases” would allow the proposal to pass legal muster. He even jokingly threatened to bring a glass jar requiring senators to donate $1 for roads each time they called the increase a “gas tax” rather than a “user fee.” He also wondered aloud himself if legislators would need to copy the bill word-for-word and reintroduce it as a House bill.
But the libertarian-leaning watchdog group South Carolina Policy Council said the state constitution does not delineate between fee increases and tax increases. “The framers of both the U.S. and our state constitution correctly believed that the House is more directly accountable to the people and so has a greater sensitivity to burdensome taxes,” Policy Council Jamie Murguia wrote in an op-ed last week. He noted state law classifies a “user fee” as being charged for government “services and programs,” which would not include gasoline.
The bill would raise the state’s current 17-cents per gallon gas tax by 4 cents per year for three years, to 29 cents by 2018. The new total would then be pegged to inflation after that. It would also double the fees for a new driver’s license (from $12.50 to $25 for a 5-year license and increase to $50 from $25 for a 10-year version) and raise biennial vehicle registration fees from $24 to $40 for drivers under age 65. It would also require any boat or utility trailers to be licensed (current state law does not require a tag), with most of the new $20 registration fee going to South Carolina’s Highway Fund.
The transportation panel is also pushing to double the state’s $300 sales tax cap. Currently a buyer cannot be charged more than $300 in sales tax for vehicles, whether they are buying a $6,000 used model or a new $50,000 sports car. After some debate, senators on the panel supported increasing that limit to $600, with the total pegged to inflation each year (capped at two percent per year).
State Sen. Joel Lourie, D-Richland, said he thinks that $600 is a reasonable compromise. He added legislators are running out of time to reach a deal. “This job is going to get more difficult to get a roads bill,” he said during last week’s hearing. “If we don’t do it this year, I think we’ll have failed the people of this state.”
Cleary had wanted a higher limit, but agreed to the compromise once the inflation adjustment was included. “We know that we’re not going to take this up for another 10 or 15 years,” he said. “I just think it’s unfair to give (car dealers) another great deal.”
But the study panel’s two other Republicans also indicated their unwillingness to go above $600. “Let us remember: it’s not the auto dealers that are paying that, it’s the consumers,” State Sen. Thomas Alexander, R-Oconee, said. Both Alexander and Sen. Paul Campbell, R-Berkeley, did support the compromise.
The bill would face an extremely unlikely chance of passage in its current form. About a dozen senators have already come out against the idea. Even if it passed the Senate, House Republicans and Democrats alike remain divided inside their ranks on the idea of a gas tax increase. And Gov. Haley has already threatened a veto of the Senate idea unless they also cut income taxes a similar amount.
“They might as well not waste their time, because we just won’t go there at all,” she told reporters last week. “We will let everything fall to the wayside before we let the people of South Carolina see a tax increase.”