By Andy Brack, editor and publisher | Political positioning has already started for next year’s state budget, not that you should be surprised.
The culprits are two big numbers causing some confusion before the debate even begins.
About a week ago, the state Board of Economic Advisors projected South Carolina lawmakers would have about $440 million in new revenues for the 2017-18 budget. It’s not the $1.2 billion they had to craft the current budget, but it’s not small potatoes either. The lower number — which would have been a dream come true during the Great Recession a few years ago — reflects a slowing economy, perhaps. But it’s important to note this: The economy is still growing.
And then earlier this week, Gov. Nikki Haley issued a grand pronouncement that caused head scratching in light of the growth: It’s time to consider budget cuts, she said.
Huh? With more money?
The likely explanation is the old game of political chicken as Haley is looking for an advantage over legislators who face a triple funding threat caused by needs for billions of tax dollars from serial under-funding of roads and education and billions more to shore up the state’s pension system, which has underperformed to the tune of $20 billion.
In the most recent legislative session, lawmakers put off the serious work of dealing with billions in road funding needs by coming up with a way to borrow $200 million a year for the next decade or so to plow into highway and bridge fixes. But that’s not enough by a long shot.
So expect renewed clashes over an increase in South Carolina’s relatively paltry $0.1675 per gallon gas tax. Raising the tax, which hasn’t been adjusted in more than 25 years, by just a dime a gallon would keep S.C. below rates in Georgia and North Carolina, but bring in about $340 million in new revenue every year. Double the increase to North Carolina’s rate and the state would generate $678 million annually for roads, some paid by out-of-state truckers and travelers.
Haley, who is so opposed to a gas tax that she can’t see straight, knows the public wants something done on roads and that a majority supports a hike. So she’s desperately trying to find an alternative to muddy the waters. The whole notion of budget cuts really isn’t about working to keep under-spending for decades under control. It’s about the gas tax. She doesn’t want a legacy that reflects taxes went up big while she was governor.
By forcing state agencies to figure out ways to come up with $200 million in budget cuts — half of which potentially would hit public and higher education — Haley will have a weapon: Reams of paper that show exactly how the state could save money without raising the gas tax. Left unsaid would be cuts that would impact services.
Meanwhile legislators will face a different climate in 2017. Some Republicans, particularly in the Senate, are mumbling they might consider a gas tax increase. When you count votes, it doesn’t take a rocket scientist to figure out the Senate’s Democrats only have to peel off six moderate Republicans to pass a tax.
And that’s what has anti-gas tax advocates like Haley and Sen. Tom Davis, R-Beaufort, worried. Which brings another level of politics to the whole mess — the governor’s race in 2018. Just as Haley is using the budget cut ruse to develop an alternative to a gas tax, Davis already is working to gin up opposition to a gas tax in what is seen as a probable bid for governor.
With all of this is going on, the House is working on comprehensive tax reform, which may include a gas tax hike, to fuel all of the needs of the state. A special committee is looking at ways to make the state’s high sales tax rate more equitable, perhaps by removing hundreds of millions of dollars of special-interest sales tax exemptions; how to balance the state’s income tax; and how to redress wrongs created by a property tax swap that hurt businesses.
More than anything, what really needs to happen is for reason to be brought into tax debates. Not more dramatic, political cockfighting.
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