BRADENTON, Fla. - South Carolina Gov. Nikki Haley will support an increase in the state's gas tax if it is tied to a reduction in the state's income tax and overhauling the state Department of Transportation.
The funding proposal calls for cutting the state income tax rate over the next 10 years to 5% from 7%, and raising the state gas tax by 10 cents in the next three years, Haley said in her fifth State of the State address Wednesday.
"This is a three-part package deal," she told the General Assembly. "In order to get my signature on any gas tax increase, we need to restructure the DOT, and we need to cut our state income tax by 2%."
Lowering the state's income tax by nearly 30% would be the largest tax cut in the state's history, Haley said. The lower rate would take South Carolina to 13th place in income tax competitiveness nationally from 38th place currently, and it would bring new jobs and investment to the state.
"Let's change the way we spend our infrastructure dollars and get rid of the legislatively elected transportation commission so the condition of South Carolina's roads is no longer driven by short-sighted regionalism and political horse trading, and we stop wasting our tax money," she said.
The eight-member South Carolina Transportation Commission governs the DOT. Seven members are elected by the legislative delegations in each of the state's transportation districts, while one member is appointed by the governor.
"Our system screams out for reform and restructuring," Haley said. "The condition of our roads and bridges is a statewide concern and yet our dollars are being spent with zero statewide perspective."
Haley, a Republican elected to her second term in November, has said that she will not approve any deal that only includes raising the state's gas, which is third lowest in the country at 16.75 cents a gallon. The last time it was increased was in 1987.
South Carolina currently has a $1.45 billion annual funding gap for transit, highways, bridges, preservation, and maintenance needs, according to the DOT. Over 40 years, the gap will grow to $70.4 billion at current funding levels, including revenues the state receives from the federal government.
"Our roads and bridges are deplorable, embarrassing and unsafe," said Sen. Joel Lourie, D- Columbia, in the party's response to Haley's plan. "If we want better roads, we are going to have to pay for them."
Lourie said Democrats are anxious to work with the governor, and to find common ground to make improvements.
Rep. Gary Simrill, R-York, called Haley's plan to reduce the income tax rate "laudable."
Simrill, who is chairman of the House Transportation Committee, agreed that the state has pressing transportation needs and said that lawmakers will work with the governor on a plan to address the issues.
The House Transportation Infrastructure & Management Ad-Hoc Committee has been reviewing state and federal road funding sources, and has discussed the possibility of raising the sales tax.
"Gov. Haley dedicates an enormous portion of her state address to road funding," the nonprofit South Carolina Alliance to Fix Our Roads tweeted in response to the governor's speech. "We all know it's the biggest issue facing our economy."