By Matthew French
Staff Writer

South Carolina motorists could be in for yet another hit to the wallet when they drive up to the pump.

A movement in the state Legislature to help fund the state’s Transportation Department could lead to higher gasoline taxes. A bill currently being debated would levy a tax on large gasoline producers bringing fuel into South Carolina.

Instead of taxing drivers directly, a politically dubious move, state Sen. Scott Richardson, R-Hilton Head, proposed a “petroleum franchise fee.” According to the language of the proposed bill, the fee will be levied on “suppliers of motor fuel sold and delivered within the state.”

“The fee equals 5 percent of the retail value of a motor fuel subject to the user fee sold by each supplier,” says Richardson’s version of the bill. “All proceeds derived from the petroleum franchise fee imposed … must be turned over to the Department of Transportation and half of the proceeds placed into an account known as the Highway Maintenance Fund and half of the proceeds placed in an account known as the State Construction Program Fund.”

Richardson openly acknowledges that the bill is a political one.

“If we tax the franchisees—those who bring it into the state—all of the politicians who signed a no-tax pledge can go back to their districts and say they kept their word,” he says. “So we would, instead of collecting the taxes from the consumer, collect it from the producers: the Shells and Exxons.”

Richardson points out that the tax would not be imposed on the gas station owners but rather on their suppliers.

“We know that the producers (of fuel) are absolutely going to pass the cost of any fee along to the consumers,” Richardson says. “At the end of the day, we need to decide if we have the commitment to fix the roads we’ve got and to build the roads we need.”

A similar bill is making its way through the state House of Representatives. Sponsored by state Rep. Rex Rice, R-Greenville, the House version caps the proposed fee at 7 cents per gallon, but the bill similarly orders that revenue collected be credited to the state’s highway fund.

But some House Republicans say they will fight the tax in any of its forms.

“I will fight any attempts to raise gas taxes at every corner,” says state Rep. Bobby Harrell, R-Charleston, chairman of the Ways and Means Committee. “I don’t think we should even consider raising gas taxes when the prices are over $2 per gallon.”

Crumbling bridges and highways

Currently, the need for more funding for maintaining the state’s roadways originates from the Transportation Department’s inability to draw any money from the state’s general fund. Instead, the department must rely on gasoline taxes for much of its revenue.

“In 1987, that money (from gas taxes) was enough. But over the last 18 years, we never indexed it,” he says. “The population of the state has doubled, and we probably have more than 5 million users of the roads, instead of the 2 or 2.5 (million) we had in 1987. While we may have more people paying the gas tax, it’s no longer sufficient to fund the kinds of projects we need.”

A bicameral proposal, first introduced by Harrell, seeks to increase the funding for the state DOT by directing virtually any fee that has to do with a roadway to that department.

If the measure is passed, fees associated with licenses, registration, reinstated licenses, learner’s permits, state-issued identification cards and commercial driver’s licenses will flow into the Transportation Department’s fund instead of the state’s general fund.

“That’s the only bill that’s likely to be debated at the General Assembly related to transportation fees,” Harrell says. “The Senate finance committee added to the Senate version of the bill a 7-cent gas tax increase to that bill. I would oppose the bill—my own bill—if it came back to the House with the 7-cent tax increase still attached. I would oppose any bill that would cause the largest gas tax increase in history.”

Bill won’t raise taxes

Harrell says his bill would not raise fees or taxes but would simply redirect existing fees to the Transportation Department.

While Richardson applauds Harrell’s original bill to apply roadway fees to highway projects, he would rather see it go to the State Infrastructure Bank, which he says can more creatively use the money for road projects.

“Either way, we’ve got to put more money into our roads,” Richardson says. “We’re $1 billion behind in road repair and $1 billion behind in bridge repair. Plus, we’re going to need $2 to $3 billion for roads in the tourist-heavy areas of Beaufort, Charleston and Horry counties.”

At the end of the day, Richardson contends, this is a business issue.

“If a company can’t operate because of the roads, it’s a problem; if they won’t come to South Carolina because of our roads, it’s a problem; if a shipper can’t get goods into and out of the port in an effective and timely manner, it’s a problem,” he says. “We need money for roads, so I say pick your poison, or this will become a significant business development problem.”

Matthew French covers governmental policy and legislation for the Business Journal. E-mail him at mfrench@crbj.com

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