We are on furlough this week and next, so you will not be receiving an Eblast next week. I hope each of you have a happy Easter and remember the sacrifice that was made for you, me and all mankind.

Funding improvements to South Carolina’s roads is the top priority this legislative session. It’s no easy task and the solutions are complex.

On South Carolina Roads

The Road Ahead…
After months of hearings that began last fall by a special House Committee, the House Ways & Means Committee advanced a roads funding bill and sent it to the House floor. The Senate Finance Committee did the same but with a different approach. Both bills seek to raise money through very different means; neither may be able to withstand a threatened veto from Gov. Haley, who has been highly vocal she will not support increasing gas taxes without corresponding income tax relief.

The House version works toward accommodating the governor by trimming the state’s 16.75 cent per-gallon gas tax to 10.75 cents and shifting funding to a new sales tax paid at the wholesale level on gasoline and diesel fuel. In exchange, an income tax break (averaging $48 for the average income tax filer) would be offered to offset any higher price at the pump. It’s predicted the proposal would bring in an additional $400 million each year. The bill also calls for a restructuring of SCDOT and the State Infrastructure Bank.

… Could Get a Bit Bumpy!
One thing is for certain – these bills are just a starting point; almost trial balloons. There will be much debate, many amendments and lots of compromise if the legislature is to produce tangible results to fix our road problems. At this point, the final solution is illusive.

At the end of this eblast is an overview of the House Ways and Means plan H.3579.

Around the House Last Week

Combating Human Trafficking
Cracking down on human trafficking in SC is a priority. A cross-county jurisdictional loophole in the current law was brought to our attention by prosecutors. As a result, we passed a measure (S.196) that would allow prosecutors to engage the grand jury system for individuals who are trafficking humans over county lines. In an effort to increase reporting from exploited individuals and prosecute their traffickers a previously established information and reporting hotline would be strengthened by expanding the publicity of the hotline to high public traffic areas. The measure now heads to the Senate and upon passage will go to the Governor’s desk for her signature.

Criminal Domestic Violence
A House panel gave its okay to legislation that would toughen penalties for those convicted on domestic violence offenses. But, unlike the Senate, the House version would not strip away gun ownership for those convicted on the charge. But members of the committee instead decided to increase the penalties for crimes involving guns. There is currently a Federal Law that prohibits anyone convicted of CDV from possessing a firearm or ammunition.

Gun Laws Approved by House

  • By a unanimous vote, the House sent the Senate a bill (H.3119) establishing the felony criminal offense of theft of a firearm punishable with a fine of up to five thousand dollars and/or imprisonment for up to ten years.
  • In another unanimous vote, the House passed a bill (H.3116) making it unlawful for a person to knowingly solicit, persuade, encourage or entice a licensed dealer or private seller of firearms or ammunition to transfer a firearm or ammunition under circumstances which the person knows would violate the laws of this state. Violations are a felony offense.

SC State Furloughs
In another effort to institute cost-saving measures at SC State University, the House amended a Senate bill (S.382) that allows the school to institute a mandatory employee furlough program up to 20 working days this year and again next year. SC State is currently facing a deficit of $23.5 million in money owed to vendors and loan debt owed to the state

Uber Okayed by House
The ride-sharing app Uber would be allowed to operate across SC under a bill that won House approval on a 96-13 vote. It creates a new category of “transportation network companies” that would cover Uber and other similar companies. The bill heads to the Senate.

Constitutional Amendment Fails
SC elects many of its Constitutional Officers while other states have the governor make some of those appointments. Last November SC voters chose to have the governor appoint the Adjutant General. The House voted on a similar proposal that would have allowed voters to decide a Constitutional amendment whether the Superintendent of Education should be appointed rather than elected. The measure got a majority of votes, but not to two-thirds required to send it to the Senate

H. 3579 Overview

The House Ways and Means full committee met last Thursday and voted to combine the two bills related to roads and income tax. The bill now moves to the whole House under H. 3579. Through the floor debate and amendment process it may experience changes. The below facts, figures, and estimates provided by the House Ways & Means Committee reflect H. 3579’s current makeup.

  1. Restructuring: There are two key components to restructuring in H. 3579. The first restructures the Department of Transportation and the second component restructures the State Infrastructure Bank.
    1. Department of Transportation (DOT)
      The Governor appoints Highway Commissioners (7 districts and 1 statewide) with a Joint Transportation Review Committee screening process approval. These commissioners serve at the pleasure of the Governor. The Highway Commission will then appoint a secretary with the advice and consent of the Senate. Commissioners hold no “terms” and may only serve a combined 12 years on the commission (retroactive).
    2. State Transportation Infrastructure Bank (SIB)
      • The SIB Board expands from 7 to 13 members. It would consist of 7 district highway commissioners, 3 appointments from the Speaker of the House, and 3 appointments from the Senate President Pro Tempore. Of those appointments from legislative bodies, 1 of each must be an ex officio Representative and Senator. SIB members would have no terms and may only serve a combined 12 years (retroactive).
      • The SIB would lower its current $100 million project minimum to a $25 million project minimum and must follow project prioritization set forth by the South Carolina Department of Transportation in accordance with ACT 114. Only a Joint Resolution can override prioritization criteria requirements. However, only one project may be re-prioritized in a single Joint Resolution.
    3. Transfer of Local Roads: Local governments that wish to take ownership of local roads (as identified by SCDOT) in their political subdivision may do so. In doing so, these local governments would be eligible for additional C-Funds. Should local governments opt in to take ownership of additional roads, they would receive transferred roads in three phases:
      • Phase 1: Local governments select 1/3 of identified roads in 2016.
      • Phase 2: Local governments select 1/3 of identified roads in 2018.
      • Phase 3: Local government select final 1/3 of identified roads in 2020.

      As part of the phase-in process, the monies allocated to participating local governments would see an increased C-fund allocation of $1 million in year one followed by additional revenue increases in phase 2 and phase 3. Participants who opt in during phase 2 in 2018 would see a $500,000 annual increase in C-funds. Finally, participants who opt-in during the final phase would see a $250,000 annual increase in C-funds. C-funds would no longer come with a mandate requiring a percentage of funds be spent on state roads; this decision would rest with local decision makers.

  2. Funding Components: There are two funding components.
    1. Gas Tax
      1. Per Gallon Tax: Currently it is 16.75 cents per gallon of motor fuel (gasoline and diesel). This proposal would drop it to 10.75 cents per gallon of motor fuel.
      2. Excise Tax: A wholesale indexed excise tax of 6% would be applied to a 6-month average of the wholesale price of motor fuel.
    2. Auto Sales Tax: Currently the auto sales tax is 5% of total vehicle costs capped at $300. This proposal would raise that cap to $500. Currently the auto sales tax is broken down with 20% going to education, 40% to the DOT, and 40% to the General fund. Under this proposal, the 20% capped at $300 for education remains, the 40% of the $300 designated to the General Fund moves to DOT and all funds over the $300 also go to DOT.
  3. Control Component: This proposal includes two controls designed to prevent dramatic changes to gas prices from affecting the revenues dedicated to infrastructure.
    1. Penny Control: The wholesale excise tax would not fluctuate more than one penny in a 6-month period.
    2. Lifetime Control: The combined gas tax (comprised of the per gallon AND excise) cannot exceed 26.75 cents/gallon.
  4. Revenue Generated
    1. Estimated New Revenue: Under this proposal revenues generated would be $428 million annually.
      1. Approximately $100 million from the auto sales tax cap increase, and shift of remaining General Funds to DOT.
      2. The remaining $328 million from the gas tax increase.
    2. Gas Tax Revenue Sources
      1. Out-of-State motorists currently comprise 1/3 of the revenues from the gas tax. Under this proposal that would equal $109 million.
      2. The Average driver (driving 11,000 miles/year in a car receiving 22 miles per gallon) would pay an additional $50 annually.
      3. The remainder is paid by “high usage vehicles” to include citizen commuters and transportation related industry.
  5. Income Tax Reduction: Under this proposal an income tax reduction would be phased in over a two-year span beginning with fiscal year 15-16. The relief is realized by increasing the amount of exempt income in each existing tax bracket by $140 in the first phase, and another $140 the second, for a combined total of $280.
    1. Cost to the General Fund
      1. 2015-2016: $1,337,967
      2. 2016-2017: $25,510,778
      3. 2017-2018: $21,910,558
    2. Average Savings: The average South Carolina taxpayer would save $48 annually.