Tax Cut, Tax Hike In SC Governor’s Plan

Photo of South Carolina Governor Nikki Haley
Photo of South Carolina Governor Nikki Haley

COLUMBIA, SC — Gov. Nikki Haley announced her budget proposal for next year Friday at the Statehouse and it includes a gas tax increase to fix roads and an income tax cut. She says taxpayers would come out ahead because the income tax would be cut by $131 million while the gas tax would go up by $49 million. “I’m going to veto anything that is a net tax increase,” she told reporters. “I’m just not going to have it when you’ve got $1.3 billion in new money. I’m not going to do that to the taxpayers of this state.”

It’s the same roads plan she proposed last year: raising the gas tax by 10 cents a gallon over three years while reducing the state income tax from 7 percent to 5 percent over 10 years. That means a tax cut of .2 percentage points per year. She would also require restructuring the state DOT.

Last year, critics said the proposed income tax cut would mean the state would have less money overall, which defeats the purpose of increasing the gas tax. While there would be more money for roads, there would be less for education, health care, and law enforcement.

But in announcing her executive budget, Gov. Haley said, “Last year they kept saying, ‘We can’t afford the tax cut. We can’t afford the tax cut.’ Yes we can, and this budget shows it, and we’re showing that we can go ahead and not cut any of our programs that matter, not cut any of the issues that are important to us and still go ahead with the tax cut.”

Her budget also includes about $300 million more for education. $165 million of that would raise the per-student spending from $2,220 to $2,300. The rest would go to raising bus driver salaries in some rural districts that have trouble attracting and keeping enough drivers; $20 million for new buses; $27 million for instructional materials; and $11 million for school and home connectivity initiatives.

“We’re focusing on technology in the schools. Some of the buildings are having more trouble with the technology and the Internet, so you’re seeing that we’re putting money towards that. But we’re also now going to start putting money towards technology for students at home. It’s only good to have a tablet at school if you can take that tablet at home and study and do your homework at home,” she says.

Some of the $1.3 billion surplus would go to flood recovery, including $75 million as the state’s matching funds for FEMA relief funds, and $29 million to the DOT to reimburse it for repairing flood-damaged roads and bridges. There’s also $40 million for beach renourishment, and $700,000 to expand the state’s dam inspection program, after so many dams failed during the floods last October.

The governor’s executive budget is just a proposal. It will be up to state lawmakers to adopt all or part of it. The House passed a bill last year that would raise the gas tax while cutting the income tax and restructuring the DOT. That plan is now in the Senate.

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