Over the last two weeks, members of the South Carolina Senate held a lengthy debate on H.3516, one of the most important bills of the 2017 legislative session. This legislation by Representative Gary Simrill (R-York), commonly referred to as the "roads bill", passed the Senate on Thursday April 27, 2017, by a vote of 30 to 9. After days of debate, lawmakers were able to get to a vote on the legislation as a result of a bipartisan amendment that the Senate adopted late in the evening on Wednesday.
H.3516, as amended by the Senate, includes an increase the State’s current gas tax by 2 cents per year over a 6-year time period for a total of 12 cents.
After year six, the gas tax would be indexed for inflation, not to exceed 2% per year; but the bill suspends indexing if the State’s motor fuel is higher than a bordering Georgia or North Carolina county. The Senate plan also includes reform to the management structure of the DOT Commission by adding an at-large member to the Commission (for a total of nine members), allowing the Governor to remove commissioners “at-will,” and increasing transparency through the required publishing of a priority project list and expenditure reports.
Another major difference between the Senate and House versions of H.3516 is the addition of tax credits and rebate programs. In an effort to obtain a veto-proof majority vote on the bill, the Senate adopted the bipartisan agreement that attempts to offset the gas tax increase on in-state residents by providing:
- A refundable credit against motor fuel user fees equal to up to 150% of the average motor fuel user fee incurred for a vehicle (or motorcycle) as a result of the 2 cents per year and preventative vehicle maintenance if an itemized list of vehicle maintenance costs and fuel expenditures is provided to the Revenue and Fiscal Affairs Office;
- A non-refundable individual income tax credit equal to 250% of the federal Earned Income Tax Credit (EITC) that would be phased in through six equal installments of .4167 of a percent;
- An increase in the current income limit for the two-wage earner tax credit from $30,000 to $50,000 phased in over six years beginning in 2018;
- An increase in the current refundable tax credit for tuition at both four-year and two-year institutions of 50%, not to exceed $1,500 at a cap of $40 million starting in 2018 plus a cumulative amount equal to the percentage increase in the Higher Education Price Index capped at 3%;
- A reduction in the property tax assessment ratio for businesses from 10.5% to an effective 8.5% that would be phased-in over two years beginning in tax year 2019; and
- A reduction in the property tax assessment ratio for business personal property from 10.5% to 9.5% beginning in tax year 2018.
As a result of the Senate floor changes on tax relief, the bill would provide roughly $640 million per year for the DOT when fully implemented after year six compared to $800 million per year as previously proposed under the Senate Finance Committee’s plan.
H.3516 will now head back to the House of Representatives where members will have the opportunity to either concur with the Senate plan or make additional changes to the bill which would likely send the legislation to a conference committee. With only six legislative days remaining in the 2017 session, the House may take action on the bill as soon as Tuesday, May 2, 2017.