In an effort to improve the state's roads and bridges South Carolina lawmakers have proposed bills that would result in major changes to its transportation system.
A Senate bill — Senate Bill 831 — would allow the state to use public-private partnerships for transportation projects. The sponsor, Republican Sen. Larry Grooms, said these might be used to create so-called "choice lanes," those added to highways where fees are charged, making them less congested than the others on that roadway.
Georgia has choice lanes and Tennessee is planning to build them.
If enacted in South Carolina, the lanes would potentially be partly funded with bonds as well as other means. South Carolina has a State Transportation Infrastructure Bank that loans money for transportation projects and sells bonds to fund them.
This bill would also promote creation of a list of state roads to potentially transfer to county and municipal control and ownership. The state currently has the fourth largest highway system in the country even though it is 40th in terms of land mass and it would like to lower its road holdings, Grooms, chairman of the Senate Transportation Committee, said.
In exchange for accepting ownership of these roads, localities would be permitted to collect sales taxes and increase real estate taxes to support the roads' maintenance.
The localities can repair roads in a much more simple and thus inexpensive manner than the state. For example, in many cases the law would require the state to buy rights-of-way and widen roads to make road improvements, but localities would be exempt from those rules, Grooms said. The state would benefit by not having to pay for the improvements and continued maintenance and the localities would benefit by getting roads improved that would otherwise languish, he said.
The state may also provide localities with direct cash payments at the time of road transfers, Grooms said.
The bill, if passed, would shift a larger chunk of the state gas tax to local governments for use in road work.
The bill would also introduce impact fees on new residential and commercial development for the expected increase in traffic on nearby roads. Developers would also have to pay for needed local transportation improvements directly stemming from their developments.
Biennial fees would be imposed on alternative fuel and hybrid vehicles, with this money going to the state highway fund. While gasoline-powered vehicles pay for road upkeep through gasoline taxes, electric vehicles are currently not contributing to maintenance efforts.
Finally, the bill would set up a transportation coordinating council to develop use, construction and payment plans. On the council along with leaders of various transportation-related departments would be the Secretary of Commerce and gubernatorial appointments who would represent municipalities and counties.
House Bill 5071 offers similar provisions but doesn't include impact fees.
"Public-private projects to deliver expansion of lanes and other improvements may move faster than other alternatives," said John Hallacy, president of John Hallacy Consulting LLC. "Given the financing will be done on a taxable basis, it would be more expensive than the municipal tax-exempt option. The question is how will the payments flow. Will the payments be from the Department of Transportation or will there be tolling to consider?"
"The increasing acceptance of P3s in the region, which has had to overcome serious resistance, means not allowing the state to use public-private partnerships on
Both Hallacy and Krist expressed skepticism about the proposal to shift road ownership to localities. "Offloading responsibilities for roads to localities may prove to be somewhat challenging," Hallacy said. "One would have to see some evidence that the locals may bring in projects at lower costs."
Krist said, "At least they are proposing a way to fund [road maintenance] below the state level but higher property taxes and sales taxes are in no one's list of favorite items right now. I'm not sure that the technical expertise exists at the local level that the proposal implies."
Terming the possible ownership transfer "a positive policy change, South Carolina Policy Council Research Director Sam Aaron said. The council is a conservative think tank focusing on South Carolina government.
The plan would allow "greater local control over roads ... and will likely result in faster response times for road repairs," he said. "We have long supported relinquishing state control back to local governments in this area."
"
Still, Aaron was not confident these changes would solve the state's transportation problems. "We are also skeptical, to say the least, about the effectiveness of both public-private partnerships and coordinating councils in addressing these challenges," he said.
Through a spokesperson, Gov. Henry McMaster said he hadn't had a chance to review the bills and therefore couldn't voice an opinion on them. However, he pointed to passages from his proposed 2026-2027 executive budget.
"We have made tremendous progress improving our roadways with major projects under construction in every corner of the state," McMaster said. "Currently there are almost $7 billion in active projects underway across the state, up from $2.7 billion in 2017. Much of that progress is a result of four years' worth of state budget appropriations totaling $1.4 billion for new construction and improvements to state-owned roads, bridges, highways and interstates."
Progress has been hindered by substantial inflation in the transportation sector, the governor said. He noted revenue from one penny of the state's gas tax could pave 114 miles of a two-lane highway in 2017, but just 87 miles in 2025.
"In addition to inflation, South Carolina's major infrastructure systems and essential government services are struggling to support and keep up with the explosive and unrestrained population growth happening across the state," the governor said.
The state had the fastest growing population of all 50 states from July 2024 to July 2025 and given this, "it's not a surprise that transportation is a major issue," Krist said.
South Carolina is rated Aaa by Moody's Ratings, AA-plus by S&P Global Ratings and AAA by Fitch Ratings.
The state's infrastructure bank's transportation infrastructure revenue bonds are rated AA-minus with a stable outlook by Fitch. Fitch in a September 2024 report cited the system's solid expansion of revenues. It noted the pledged revenue stream has become broader and less volatile due to the diversification of South Carolina's economic base. It cited management's intention to reduce leverage through mainly using cash to finance its capital plan through 2028.
Moody's
More than 70% of the state House and Senate legislators are Republicans, as is the governor.
