Three things matter in legislation—what a bill says it will do, what the bill might do, and precedent.
Legislators on Wednesday overwhelmingly overrode Republican Gov. Henry McMaster’s veto of a bill to phase in a 12-cents-a-gallon gas tax increase over the next six years, beginning in July.
The new funds—together with additional driving fees—are set to raise roughly $630 million annually upon full implementation. Under the new law, gas tax revenues are targeted for a newly-created Infrastructure Maintenance Trust Fund, which sparked last-minute efforts this week to block the increase.
A small group of senators tried blocking the bill for fear the new fund could be routed to borrowing for new roads, contrary to what supporters claimed.
In trying to imagine a few years into the future, I too will be watching carefully the extent to which existing roads are repaired. Surely within the next two to three years, significant repairs will be underway as millions of dollars flow into the transportation system.
Will this new law provide the infrastructure repairs we’ve all been waiting for? Or will new projects continue to be built as busy highways deteriorate? I honestly don’t know.
As South Carolina drivers await the day when they can quit dodging dreaded potholes on their commute, here are three things to know about the new trust fund—
What the new law says it will do
By law the new fund “must be used exclusively for the repairs, maintenance, and improvements to the existing transportation system,” according to the language of the law, which is set to take effect in July.
That sales pitch was used in answer to the criticism of alleged mismanaged dollars by state roads agencies. Mismanagement led to rural road improvements in powerful legislators’ districts, even as roads deteriorated in other parts of the state, critics said.
But that section includes some leeway. It also lets the Transportation Department’s commission commit debt from the new fund and two other roads funds “into a special fund to be used for the sole purpose of paying the principal and interest, as it comes due, on bonds issued for the construction or maintenance of state highways, or both.”
That “special fund” is the State Highway Construction Debt Service Fund.
What the new law might do
The new law repeals a 2013 law that transferred $50 million annually from the SCDOT to the controversial State Transportation Infrastructure Bank. Created in 1997, the STIB aims to build large new infrastructure projects untouched by the SCDOT because of the bank’s capacity to deal in debt. The bank’s flagship project is the Arthur Ravenel bridge in Charleston.
“State highway construction debt service” is the STIB’s business. Concern that the new revenue could further the aims of the STIB—led by the state’s most powerful legislators—is a reasonable reaction to a careful reading of this section.
What’s been done before
The STIB has a history of routing gas tax revenue—dubbed a fee—for use in bonds, as recently noted by the small-government South Carolina Policy Council.
Their charge is that this renaming exists to reroute dollars to the repayment of revenue bonds, since the state constitution prohibits paying debt with tax revenue.
It’s unclear whether repaying revenue bonds with taxes that have been converted to non-tax funds—as the STIB historically has done through the SCDOT—is permissible, according to a 2016 report by the state Legislative Audit Council.
Whether or not rerouting funds to pay off debt is permissible, the STIB has a history of doing it.