Category Archives: Taxes

Speaker Lucas is right to trash the Senate GOP roads plan

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I understand from various sources that the Senate today is debating, and plans to vote on, the “roads plan” that I excoriated last week. Here’s hoping it’s not going well.

As Cindi wrote the other day, the GOP proposal has its good parts, including real reform in governance of DOT. But it also contains an absolute dealbreaker, ladies:

If the legislation skipped over Section 4, Gov. Nikki Haley would be correct to say it’s “exactly what we need.” We would have the reform we need, and the Legislature could devote some one-time money to roads again this year and adopt a long-term funding plan next year that befits the reformed Transportation Department.

Unfortunately, it doesn’t skip Section 4, which commits not just this General Assembly but every General Assembly in perpetuity to siphoning $400 million out of our state’s general budget fund and giving it to the Transportation Department.

The result is a bill that promises to break trust with the voters and strangle out other state obligations and, at bottom, isn’t worth the paper it’s written on.

For as long as we have been paving roads, we have collected a gas tax and driver fees to build and maintain those roads, on the theory that people inside and outside of South Carolina who use our roads the most should pay the most for them.

We have collected sales and income taxes to pay for our schools and courts and state police and child protection and economic development and environmental protection and most other state services.

The Senate plan changes that, dramatically. It diverts $400 million in sales and income taxes — more than 5 percent of the state budget — to pay for roads. That means we have $400 million less — not just next year but every year going forward — to pay teacher salaries, including extra pay to reward and attract the best teachers for the neediest students, to pay cities and counties for holding elections and performing other duties the state requires them to perform, to hire caseworkers to protect vulnerable children from abusive parents, to employ the judges who lock up the bad guys and the prison guards who keep the bad guys from escaping and the scientists who test our water to make sure it’s safe to drink, and everything else.

The roads diversion breaks trust with voters, in much the same way lawmakers do when they raid trust funds….

Make no mistake: A proper roads bill includes both proper reform and a gas tax increase. And it most assuredly does not include an open-ended raid on the funding for everything else the state of South Carolina does.

If Harvey Peeler manages to ram through this awful mess today, it will be up to the House to kill it. And Speaker Jay Lucas said it best last week:

1126136229“For 323 days, the Senate has had every opportunity to show leadership and propose a real, long-term solution for road repair in South Carolina. The current Senate amendment simply kicks the can further down the road and frankly, into a pothole. The General Assembly has been using general fund dollars to slap a band-aid on roads for years with very little to show for it. I urge the Senate to give this issue the attention that it requires and rally around a proposal with a long-term solution that keeps our families safe and our economy thriving.”

 

 

 

That’s no roads deal. It’s a cut-everything-else deal…

I’m running from meeting to meeting today, but here’s a topic to get y’all started:

The “good” news is that they don’t cut income taxes — which, of course, was always an insane, utterly irrelevant condition imposed by the governor.

So basically, it’s a wash. It’s a deal that does nothing to address the need for an adequate revenue stream for roads…

Newman and Washington face tax charges

Both Richland County Councilman Kelvin Washington and former Columbia City Councilman Brian Newman have turned themselves in to authorities in connection with a tax investigation, and Newman’s attorney says he will plead guilty today.

Here’s The State‘s story, which I assume will soon be updated:

A former Columbia city official and a current Richland County councilman turned themselves into law enforcement Tuesday to face tax charges stemming from an ongoing investigation by the S.C. Department of Revenue.

Former Columbia City Councilman Brian Newman, 33, a local attorney who owns his own practice specializing in criminal defense, will plead guilty to two counts of willful failure to file timely tax returns for a total of $201,179 and be sentenced at a hearing scheduled for 2 p.m., his attorney Bakari Sellers said.

“He wants to get this wrapped up,” Sellers said. Already Newman has filed his back-tax returns and has paid his back taxes, which total about $9,800, Sellers said.

Richland County Councilman Kelvin Washington, 51, is charged with three counts of failing to file income tax returns for 2012, 2013 and 2014 for a total $426,000 in alleged unreported income. He is represented by attorneys Mike Duncan, Tim Rogers and Rep. James Smith, D-Richland….

It’s somewhat unclear at this point whether there’s any direct connection between these charges and the county’s penny sales tax, the handling of which the state Department of Revenue is investigating, except in this sense: “In a detailed audit such as the…  one DOR has done of the penny sales tax program, it is routine for auditors to check the income tax records of top people involved.”

But who knew Newman was even involved in that? The big shock in today’s news (to me, anyway), is the name of Brian Newman. The voters of District 2 just can’t seem to catch a break — first E.W. Cromartie, now this. Here’s hoping they fare better with Ed McDowell…

The Senate, as is its wont, resists reforming DOT

While I think it’s great the Senate is trying to come up with even more money to fix our roads, I have to agree with Speaker Lucas on this one:

State senators passed their own version of a plan Tuesday to raise money to repair the state’s crumbling roads, setting up a crash with their counterparts in the S.C. House.

The collision came as the Senate Finance Committee voted 14-8 to replace a House road-repair plan with a Senate proposal. The Senate plan would raise more money for roads — roughly $800 million a year versus $427 million — but also increase the gas tax more — by 12 cents a gallon versus 10 cents….

House Speaker Jay Lucas, R-Darlington, said he was “extremely disappointed” the Senate committee did not debate the various parts of the House bill, instead substituting its own proposal.

Lucas called the House’s 87-20 passage of its own roads plan two weeks ago a “courageous vote,” adding senators focused only on “dollar signs,” not the other reforms in the House plan.

State Rep. Gary Simrill, the York Republican who sponsored the House bill, said the resounding House vote — enough to withstand a promised Haley veto — was because that proposal also included reforming the State Infrastructure Bank and S.C. Department of Transportation.

“The Senate bill … has nothing for reform. It has nothing for right-sizing DOT,” Simrill said. “It is just a funding (proposal).”…

Funding the roads without fixing DOT is almost as bad as reforming DOT without funding the roads — as Cindi pointed out today.

We need to do both, and we’ve needed to do both for a long, long time. It’s time lawmakers move away from the past two decades of failing to do either.

At long last, the House stands up to the governor on roads

Finally, the House has done what it always had to do if it were to act rationally on financing road construction — raise the tax designed for that purpose, which had been kept ridiculously low:

The South Carolina House passed a bill Wednesday to pay to repair the state’s crumbling roads by increasing the state’s gas tax by 10 cents a gallon.

The proposal, which would raise roughly $427 million a year, passed 87-20, a large enough margin in the GOP-dominated House to survive a veto threat by Republican Gov. Nikki Haley.

State Rep. Gary Simrill, R-York, said the “strong vote” shows House members are serious about fixing S.C. roads….

Here’s hoping House members continue to stand up against the governor’s nonsensical stance, and that the Senate acts reasonably as well.

So far, the governor has reacted in a predictable manner, demagoguing on Facebook rather than engaging lawmakers.

Should we move toward a consumption-based tax system?

You may or may not recall that our own Fritz Hollings has long been an advocate of a VAT tax on the federal level.

Well, Fritz is probably pleased by this story in the WSJ today:

U.S. lawmakers on both sides of the aisle increasingly are finding appeal in an ambitious concept for overhauling the nation’s income-tax system: a tax based on consumption, a tool long used around the world.

The tax-writing Senate Finance Committee is giving new consideration to the consumption-tax idea with the hope that its promised boost to economic growth would ease the way to a revamp.

As lawmakers have examined a tax overhaul, “it becomes extremely difficult to see a political path to accomplish it” within the confines of the current income-tax system, said Sen. Ben Cardin (D., Md.), co-chairman of a Finance Committee working group negotiating a possible overhaul of business taxes.

As a result, the idea of a consumption tax “is getting a great deal more respect, and it is in the discussions,” he said.

Mr. Cardin introduced legislation last year to create a type of consumption tax known as a value-added tax and at the same time lower business taxes and scrap income taxes completely for lower-income Americans….

What do y’all think?

Both ends of the political spectrum attacking the GOOD part of Haley’s tax-swap plan

This does not bode well for responsible policy-making in South Carolina. (Now, if there’s an “Understatement of the Year” contest somewhere, and there’s a cash prize, I want one of y’all to enter that statement for me, on account of the fact that I’m too modest to do it myself. If there’s more than one such contest, enter it in the one with the biggest cash prize. I mean, duh.)

I had an oh-so-brief, and oh-so-ill-founded, moment of optimism last week when I read this:

Competing state roads-funding plans from the GOP-controlled S.C. House and Republican Gov. Nikki Haley appear to be on a collision course unless a compromise can be reached by next week….

Because I thought, for that brief second, contrary to all past experience, that maybe it means they’re willing to raise the gas tax without a much-bigger cut in the income tax that would more than wipe out any overall advantage to the gas tax.

Silly me. I have these Panglossian moments from time to time, but they pass quickly enough when I run head-on into reality. This particular fit was fully over by the time I was done reading this bit:

Some GOP lawmakers, wary of opposition to Haley’s plan by the limited government Americans for Prosperity group, are hesitant to back a direct gas-tax increase….

Because, you know, that’s what’s important: Slavish devotion to the agendas of out-of-state groups that don’t give a tinker’s dam about South Carolina, rather than whether our state’s needs are attended to.

So basically, the problem with Haley’s “roads” plan isn’t the much-greater tax cut that has nothing to do with paying for roads. The problem, for our solons, is the very modest part that would benefit roads.

But surely, surely, there are some lawmakers who are neither automatons for Washington interest groups nor sensible folks who fear meeting such automatons in a primary.

Which is to say, there still ARE some Democrats in the Legislature, right? I mean, they’re too few to be effective or anything, but at least they can stand up for a needed, sensible tax increase when no one else will, just so somebody is standing up for wise policy. Right?

Wrong. Here’s what the Democrats are saying:

COLUMBIA, S.C. (AP) – Democratic legislators say Gov. Nikki Haley’s plan to cut income taxes by $9 billion over the next decade is nothing but a tax hike for more than a million South Carolinians….

Haley announced last month she’s willing to support increasing the gas tax by 10 cents over three years to pay for road and bridge work, but only if legislators cut income taxes by 2 percentage points over 10 years….

The office’s economic advisers project that 1.1 million people who file income tax returns – or 46 percent of filers – would see no benefit because they would pay no personal income taxes anyway, due to previous cuts to the bottom brackets.

Democrats note those taxpayers would, however, pay the gas increase.

“One million people will only see a tax increase,” said Rep. James Smith, D-Columbia….

So basically, no one is articulating the case for what actually ought to happen. Which is that we should increase the tax (the ridiculously low tax) that already exists specifically for the purpose of paying for roads, since we don’t have enough money to fix and build roads. We can’t even get folks to stand up for it at a moment when it would cost so little politically, because gasoline prices are so low that no one would notice the increase.

Welcome to the State House.

What Haley proposed isn’t a ‘road plan.’ It’s a tax cut plan

In the sake of clarity, The State‘s editorial Sunday about Nikki Haley’s “Let’s Make A Deal” proposal on paying for roads maybe what should have been an obvious point, although I had not yet thought of it this way:

WHEN MARK Sanford ran for governor in 2002, he proposed to increase our tax on gasoline and eliminate the state income tax. He didn’t claim it was a plan to save our roads. It was a plan to cut our taxes, plain and simple.

And that’s what Gov. Nikki Haley offered us in her State of the State address on Wednesday: a plan to cut taxes. Oh, she called it a plan to address what most businesses and lawmakers and many citizens consider our most urgent problem: our crumbling roads and bridges.

But it would cover barely a fifth of the need, and in reality it was just a warmed-over version of the Sanford plan. It should meet the same fate as the Sanford plan, which the Republican Legislature rejected, because lawmakers knew we could not afford a massive reduction in the money available to pay for schools and prisons and industrial recruitment and mental health and other basic services.

Gov. Haley did propose to spend the new gas tax revenue on roads: $3.5 billion over the next decade. But she also proposed to steal $8.5 billion from those core functions of government over that same period.

The governor says she’s making roads a priority (although really she’s making tax cuts the priority), and it’s true that we can fix a big problem in government by making it a priority. But if we aren’t careful, we create other problems, as we saw most recently with the cuts to our child-protection program that Gov. Haley now wants to reverse…

Yup. Instead of focusing on the problem under discussion, something of importance to everyone who cares about the state’s actual needs — the lack of funding for roads — the governor is really using that as a smokescreen to achieve an ideological goal that doesn’t address any actual problem.

That wasn’t fully clear to me until I saw the numbers: $3.5 billion for roads, but $8.5 billion for tax cuts…

Haley’s ‘solution’ for roads: Rob the general fund

On my way home last night, listening on the radio, I heard some things from our governor that sounded pretty good to me, including her continuing initiatives to try to help out poor, rural schools. It was refreshing to hear a South Carolina Republican say, in such a prominent venue, “for the first time in our history, we acknowledged that it costs more to teach those children mired in poverty than those born into a secure economic situation.”

I was less enchanted a moment later, when she announced, “And all of this will be done without spending a single new tax dollar.” In other words, any gains we make in education will be accomplished by cutting back on something else that state government does.

And that brings us to her proposal on paying for roads, which is essentially to take the money out of the general fund, underfunding some other state function.

She says she can go for doing the right and logical thing, the obvious thing we should do without any conditions or contortions — raise the gas tax. But only if we cut the unrelated income tax. (And restructure the transportation agency, which of course is fine — I’ve advocated it for more than two decades — although not necessarily a thing we should hold our breath on while roads and bridges fall apart.)

The foolishness of this would be immediately apparent to everyone if it were a one-to-one swap. If the income tax was dedicated to paying for roads, then no one could miss the idiocy of raising revenues for roads with the left hand while lowering them with the right.

But the income tax doesn’t pay for roads; it goes into the general fund to pay for the rest of government. And among the hate-the-government crowd, the Haley proposal will make sense. How do they get there? By clinging to the belief that most government spending is waste anyway. And to the even more absurd belief that if you just cut off the money tap, efficiencies will magically appear, and only the “waste” will be cut.

I’ll say to this what I always say to such proposals: If you believe the general fund can do without those revenues, then tell us what you want to cut. Make the cuts first, and then reduce the no-longer-needed revenues.

But they won’t do that. That would be hard. They prefer the magical-thinking approach — just cut off the money, and everything will work out OK.

The honest thing would be to say, here is the thing that I think is less important than funding roads. But that would incur a political cost. The governor, and those who will support her idea, just want the warm-and-fuzzy credit that comes from cutting a tax, any tax.

This is the kind of proposal you make when you’re more interested in staying in the good graces of the Grover Norquists than you are in governing.

I think our governor has matured in office in a number of ways. She used to call the discomfort of mainstream Republicans over her sudden rise “a beautiful thing,” with a twinkle of malice in her eye. Now, she uses that phrase in a more positive way:

Whether I’m in California or Connecticut, Montreal or Minnesota, the story of South Carolina’s success is front and center. Everywhere we go there is excitement – and frankly, not a small amount of envy – over who we are and what we’ve been able to accomplish. It’s a beautiful thing….

But the deal she is proffering on roads is a dereliction of responsibility.

Again, if we want better roads, we should dig into our pockets (and into the pockets of visitors who use our roads) and pay for them. Magic beans are not a solution.

Democrats walk back their awful casino proposal (a bit)

Two days ago, I said I hoped that when the SC House Democrats announced their legislative priorities on Tuesday, they would back away from their awful idea of legalizing casinos in order to pay for roads.

I didn’t have much confidence that they would, and I didn’t attend their presser.

But I’m pleased and surprised by the release they sent out after yesterday’s event. No, they didn’t abandon the idea. But it was no longer the first thing they mentioned on the topic of paying for roads, and the first thing was now the one rational way to do it — by raising the tax that is intended for that purpose, a tax that hasn’t been raised since 1987:

SC House Democrats Announce 2015 Legislative Agenda
Highlights include road funding, education funding reform, equal pay, redistricting reform
Columbia, SC – South Carolina House Democrats announced their legislative agenda for the 2015-16 session at a press conference at the state house on Tuesday. Led by Minority Leader Representative Todd Rutherford, Democrats first stressed the need to tackle road funding this session.
“House Democrats are endorsing an ‘all of the above’ approach to road funding this year,” said Democratic Leader Todd Rutherford (D-Richland). “The time to be picky about how we fund our roads is over. Simply put, we will not stand in the way of a gas tax increase, nor will we stand in the way of new revenue through casinos. The only thing we’ll stand in the way of is kicking the can down the road. We have to plug our $45 billion infrastructure deficit before a bridge collapses and people die.”
Democrats also called on the Governor and Republicans in the general assembly to withdraw their “embarrassing” appeal to the Supreme Court ruling over K-12 funding.
“For twenty years, Republicans have ignored the issue of education funding in South Carolina,” said Representative James Smith (D-Richland.) “Instead of fighting the Supreme Court ruling calling on us to address the inequalities in school funding, let’s actually roll up our sleeves and do it. We owe it to the students, parents, and teachers of South Carolina. “
Democrats also called on Governor Haley to negotiate a South Carolina-centered alternative to Medicaid Expansion with the federal government to allow us to bring our federal tax dollars back to the state.
“It makes zero sense to continue to refuse to accept our own tax dollars just so Governor Haley can thumb her nose at the President,” said Rep. Justin Bamberg (D-Bamberg). “Fourteen Republican Governors have now come out in support of some sort of Expansion alternative that they negotiated with the federal government. Why shouldn’t we do the same?”
The other issues Democrats will focus on this session include equal pay for female state employees. South Carolina is one of just four states in the nation without a equal pay law. Representative Leon Stavrinakis has proposed a bill that would ban gender pay discrimination among state employees. His bill was modeled after a Louisiana bill that passed an overwhelming Republican General Assembly and signed into law by conservative Republican Governor Bobby Jindal.
House Democrats also endorsed a plan to establish a living wage in South Carolina. Currently, South Carolina is one of just five states in the country without a state-mandated minimum wage law. Representative Gilda Cobb-Hunter’s proposal would set the wage at $10.10 per hour.
Democrats also pledged their support for ethics reform this session. Though they said any ethics reform should also include reforming the redistricting process in South Carolina. Their proposal would install an independent panel to draw district lines instead of partisan legislators. In 2014, 100% of all incumbent legislators were re-elected in the general election.
“District lines are purposely drawn by legislators in order to create a safer political environment for themselves and their political party,” said Rep. Laurie Funderburk (D-Kershaw), the author of the bill. “Gerrymandering has created a polarized legislature that seeks to root out moderates and replace them with politicians who only have to worry about winning their primaries. Reforming our redistricting process is critical to a more functional General Assembly and regaining the trust of the voters.”
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Sure, I’d like to see them pick up the gas tax ball and run with it, but this indirect sort of endorsement at least marks progress.

Krauthammer bravely pushes the Energy Party line

Enjoyed this Charles Krauthammer piece over the weekend:

For 32 years I’ve been advocating a major tax on petroleum. I’ve got as much chance this time around as did Don Quixote with windmills. But I shall tilt my lance once more.

The only time you can even think of proposing a gas tax increase is when oil prices are at rock bottom. When I last suggested the idea six years ago, oil was selling at $40 a barrel. It eventually rose back to $110. It’s nowaround $48. Correspondingly, the price at the pump has fallen in the last three months by more than a dollar to about $2.20 per gallon.

As a result, some in Congress are talking about a 10- or 20-cent hike in the federal tax to use for infrastructure spending. Right idea, wrong policy. The hike should not be 10 cents but $1. And the proceeds should not be spent by, or even entrusted to, the government. They should be immediately and entirely returned to the consumer by means of a cut in the Social Security tax….

A $1 gas tax increase would constrain oil consumption in two ways. In the short run, by curbing driving. In the long run, by altering car-buying habits. A return to gas-guzzling land yachts occurs every time gasoline prices plunge. A high gas tax encourages demand for more fuel-efficient vehicles. Constrained U.S. consumption — combined with already huge increases in U.S. production — would continue to apply enormous downward pressure on oil prices….

Quixotic, yes. But I stand up and cheer whenever anyone has the courage to speak sense on the gas tax.

I don’t know whether his FICA rollback is the best thing to do with the money. I’d like to see some serious investment in infrastructure. But it doesn’t matter. Raising the gas tax and using the money unwisely is actually better than not raising it at all, for the reasons Krauthammer cites.

By the way, in praising Krauthammer for being so Energy Party, I don’t mean to claim he got the idea from me. As he says, he’s been pushing this uncommon sense idea for 32 years. The Energy Party has only been around for a fourth as long.

But of course, the odds against us are as great as ever. Too many on both the left and the right hate the idea of gas tax increases. But at least there’s something afoot in Congress…

This morning’s CRBR legislative panel

Sen. Joel Lourie, Rep. Nathan Ballentine, Rep. Beth Bernstein, and Otis Rawl of the state Chamber.

Sen. Joel Lourie, Rep. Nathan Ballentine, Rep. Beth Bernstein, and Otis Rawl of the state Chamber.

I went to this morning’s “Legislative Lowdown” breakfast sponsored by the Columbia Regional Business Report. I waited and let Chuck Crumbo go ahead and write about it, since he gets paid to, and here’s his report. Use that as a baseline.

The panel was the same as this one in 2010, only with Rep. Beth Bernstein in place of Rep. James Smith.

Here are a few random impressions I formed:

First, while I think these annual sessions have been highly informative and fair to all viewpoints, CRBR should probably make an extra effort to get more Republicans on the panel, just to more accurately reflect realities. I wouldn’t take any of the Democrats away; I’d add a couple more Republicans — maybe Kenny Bingham and John Courson, or Katrina Shealy.

Here’s the one thing I Tweeted out during the session:

Otis wasn’t saying we shouldn’t have ethics reform, but he certainly seemed to regard it as a distraction, as a plate of vegetables with no meat, saying, “I know they’ve got to do this,” but… His tone reminded me of the bank examiner in “It’s a Wonderful Life.” Remember George Bailey, all animated, telling him about the fact that his brother is going to the White House to receive the Medal of Honor from the president, and the bank examiner says, without a shred of interest, “Well, I guess they do those things….”

Well, that’s Otis being told about ethics reform. He supposes legislators have to get this ethics stuff out of their system, but he’ll be glad when they’re done and move on from it.

Now in his defense, he sees the urgent need for workforce preparation, infrastructure and other things that bear on our economic well-being, and he should be focused on those things. But he was really a wet blanket on the ethics stuff.

Others were more interested in the topic. Rep. Bernstein predicted that, again, the sticking point will be independent oversight, instead of lawmakers policing themselves. She said that was key, but signaled willingness in a pinch to accept a “hybrid” approach, with some lawmaker participation.

On Medicaid expansion, Sen. Joel Lourie said two things that interested me. First that Christian Soura, the guy Nikki Haley just appointed to replace Tony Keck at HHS despite his never having done anything like that, is a very impressive guy. I’ve gotta meet this guy, if Joel thinks that. Or at the least, hear an elaboration on what impressed Joel. Then, he said he appreciates the position of those who oppose Medicaid expansion because they’re worried about the state having to pay 10 percent of the cost after three years. I usually don’t hear Democrats say things like that.

As Chuck noted in the lede of his report, there was pretty much a consensus that for lawmakers to act meaningfully on paying for roads, there would have to be a lot of pressure on them from outside the State House. Sen. Lourie said there are three kinds of people in the Legislature on this — those who clearly see the need to come up with road funding, those who can maybe be talked into it, and “the not no, but ‘hell no’ group.” Republican Nathan Ballentine said that was accurate, and “The majority in the House, the majority in my party, are in the ‘hell no’ category.” He says he’s not afraid of raising the gas tax, and noted that he voted for the cigarette tax increase awhile back. But getting the rest to go along will take heavy lifting, especially with the governor’s veto threat. There was discussion of raising fees for driver’s licenses. Otis Rawl noted that we only pay about $2 a year for those, and certainly, he asserted, it’s worth more than that for our families to travel on safe roads (and for our goods to get to market, he was quick to add).

It was predicted that roads, ethics and one other matter — reacting to the Supreme Court decision saying the Legislature hasn’t done enough to educate children in poor, rural districts — will dominate the session. The general consensus among these suburban lawmakers was that whatever is done for the poor, rural districts, it not be taken away from the affluent suburban districts. Which to me indicates more money would have to come into state coffers, although I didn’t hear anyone say that overtly.

And of course, more than money is needed. After talking about how bad things are in Marion County, Sen. Lourie said, “Maybe we don’t need three districts in Marion County.”

That caused me to break my rule about not asking questions at such events. I rose to suggest that everyone talks about school district consolidation until it strikes close to home. I agree that there shouldn’t be three districts in Marion County, but I asked, “should there be three districts in Richland County, and five in Lexington?”

He actually had a good answer. As he said, if the state is going to help out Marion County in ways that Richland and Lexington districts aren’t asking it to do and don’t need it to do, then there’s an extra expectation that Marion should do some things it can do on its own — like getting rid of duplicative administration. Rep. Ballentine agreed, saying there’s a much greater imperative to consolidate in districts with fewer students total than you would find in a single school in the city.

Yes, they’re right. The case for consolidation is much more compelling in the rural districts. But that doesn’t mean it wouldn’t be a good thing in the big counties, as well.

Anyway, that’s my rambling report…

 

Curtis Loftis helped me decide to vote ‘yes’ on sales tax

As I told y’all, I was really agonizing over the Lexington County sales tax referendum. I knew the county needed some infrastructure funds, but we’ve really put a lot of stress on the sales tax in this state, and the proposal lacked the thing that made me get behind the Richland County penny — the support for the bus system.

But SC Treasurer Curtis Loftis helped me make up my mind, with this release last Friday:

Hi,

Many local governments and special interest groups across our state have decided that now is the time to raise your taxes. I understand their arguments because I also want better roads, education, drainage, and infrastructure.  However, as your State Treasurer, I have seen how all levels of government “manage and protect” your money, and the current standards are simply unacceptable.

I probably don’t live in your county, so I must respect your right to tax yourselves. However, we must have fundamental change in how our government operates. Implementing true fiscal responsibility and accountability are the first steps government can take to earn our trust.

Since the government and special interests want our money now, the time we should bargain for a “better deal” is now. Let’s say NO to new taxes and YES to meaningful transparency and accountability. Let’s say NO to back room deals with special interest and YES to high-ranking government officials being held responsible for protecting our money and delivering a quality product.

I’m going to vote NO on new taxes at the polls on Tuesday, and I encourage you to do the same.  Let’s give the government and special interests a rain check for a vote on new money until the proper measures are in place to protect our money and deliver what is promised by special interests.

Be well,

Curtis Loftis
Treasurer, State of South Carolina

The next morning, I read in the paper that Loftis was specifically opposing the Lexington sales tax proposal.

Really? Here you are, the top fiscal officer (or one of them) of our state, and you’re going out of your way to say something about a local tax proposal, and that’s it? Instead of an analysis of the pros and cons, you essentially say, “I’m against tax increases, so I’m against this one.” That, and “government is a bad thing, and when it raises taxes, it’s just for special interests, and never for the public’s benefit.” The kind of vague universal condemnation of Man and all his works that a malcontent with no political power (or, who thinks he has no political power) might sit at a bar and mutter to the bartender after a couple too many.

Yeah, thanks for helping me work through this one, guy!

Of course, I was helped even more by Warren Bolton’s thoughtful column Sunday, in which he set out the one argument that settled it for me:

WHILE LEXINGTON County’s proposed Penny for Pavement tax plan has its shortcomings, there’s a grim reality that voters need to understand as they consider whether to approve the measure aimed at addressing chronic congestion, traffic problems and road safety.

No other help is on the way…

Basically, there’s no Plan B. Local governments have few options when it comes to paying for roadwork that the state can’t seem to get its act together on. This was the plan. If important projects were to be funded, this was the option.

So I voted for it.

Trying to make up my mind on the Lexington sales tax hike

This story in The State today reminds me that I have to decide by next week whether to vote for the Lexington County penny tax increase.

I checked with Warren Bolton to see whether they’re going to have anything about it on the editorial page. He said there will be something, and I look forward to reading it. Y’all may think of me as a guy who comes equipped with a full set of strongly-held opinions, and to some extent that’s true. But my daily discussions with Warren and Cindi — and back in the halcyon days, Mike Fitts and Nina Brook and before them John Monk and Claudia Brinson — helped me refine and correct and hone my views. I was always smarter about an issue after discussing it with them. Even if I still had the same general view I went in with (which, I admit, was usually the case), I had a better grasp on it, and had sanded off the rough edges, when I came out.US_One_Cent_Obv

And when, as with this case, I’m not sure what to think, such a discussion always helped me make up my mind. (That dynamic, by the way — the testing of one’s thoughts against those of a group of thoughtful people — is what editorials, and especially endorsements, are all about. Even if you disagree with the piece, and don’t change your mind, you’ll be smarter about the way you approach the issue for having tested your views against the ones you read.)

I know that if I could sit in a regular morning meeting with my friends on the edit board, I could arrive at a conclusion that I would be comfortable with, and that I could support and defend. Lacking that, I look forward to seeing what they publish.

The problem I have making up my mind on the Lexington penny is that it’s just for roads and infrastructure. I backed the penny in Richland because half of it went to the buses. I’d have backed it more enthusiastically if it had all gone to public transportation. But Lexington County largely turns its back on the bus system, and is all about cars and roads. Which bothers me…

OK, it’s not ALL about cars and roads. There’s some other infrastructure in there. But I’m happy to pay the Richland penny because it’s funding something that is an alternative to cars and roads, and which the community needed, and which it was having trouble paying for otherwise. (And though I do live in Lexington, I probably spend at least as much on taxable items in Richland.)

Then there’s also the problem that we’re already leaning on the sales tax too much in this state. It’s crept up to where it’s on the border of being too high if not there already, while property and income taxes aren’t bearing their share of the load (OK, business property taxes are, but primary-residence taxes are not).

And as I’ve said repeatedly, we have a mechanism for building and maintaining roads — the state gasoline tax. That needs to be raised, rather than just raising sales taxes here and there across the state.

At the same time, that is still a tough row to hoe, and in the meantime we have inadequate roads. So I struggle with this.

Maybe y’all can help me with this. The morning meeting is hereby convened…

STILL no victims of Department of Revenue breach

When an alert reader brought this to my attention, I thought that maybe I’d been wrong about no one yet being harmed by the huge SC Department of Revenue security breach. In other words, maybe Vincent Sheheen was in “luck,” in that there was a rich vein of wronged taxpayers out there ready to channel resentment at Nikki Haley:

Calls pour in to ID theft unit

South Carolina’s tax agency hacked in October 2013

By Tim Smith

Staff writer tcsmith@greenvillenews.com 

COLUMBIA — The incidents are an all too familiar and scary part of modern life: a monthly statement shows someone has been fraudulently using your credit card; a store where you’ve never shopped sends you a notice demanding repayment of charges you’ve never made; a laptop be­longing to a government agency with your personal data has been stolen.

Two years after a hacker broke into South Carolina’s tax agency and took data belonging to 3.6 million taxpayers, the in­cidence and threats of identity theft are so pervasive that a four-person state unit reg­ularly handles calls about the subject.

In fact, since October 2013, when the identity theft unit for the state Depart­ment of Consumer Affairs began operat­ing, more than 3,300 people have called to talk about identity theft or some type of scam, some of which are attempts at iden­tity theft, said Juliana Harris, a spokes­woman for the agency. “I definitely know that calls are up,”she said….

But then, I got to this line, way, way down in the story (the 27th graf; not many news stories these days even have 27 paragraphs):

After the Department of Revenue breach, she said she stayed on the phone constantly all day, with every one of her lines lit up. She said she might have talked to 100 people per day following the revenue department hacking.

No one has come forward since the breach saying it has caused their identity to be stolen, she said. 

So. We have yet to see our first victim of the huge hack at DoR. I mean, we’re pretty much all of us “victims” in that our data were stolen. But who has been harmed by that yet?

By the way, you might want to read Cindi Scoppe’s column today on how Sheheen is emphasizing the wrong things in his criticisms of the incumbent — but also how he has little choice, since the right things are so hard to explain…

Sheheen’s plan for roads (first, no gas tax increase, which is a BAD thing…)

Vincent Sheheen has presented his plan for fixing roads in South Carolina, and right off the bat, he loses me by saying he wouldn’t do the most obvious thing that needs to be done — increase the gas tax in order to pay for it all.

Here’s his release:

Sheheen Releases Plan to Rebuild Roads & Bridges
Gubernatorial candidate lays out plan to responsibly invest in infrastructure and restore safety after years of neglect
Camden, SC. – Today, Sen. Vincent Sheheen released his plan of action to rebuild roads and bridges in South Carolina. The plan lays out a responsible course of action to improve safety and efficiency of the state’s infrastructure immediately and for the long term.
Sen. Sheheen’s plan centers around four key components that will increase accountability and lead the state to responsibly invest in infrastructure without having to raise the gas tax: adopt a Fix it First approach to focus on repairing roads before building new ones; reorganize the Department of Transportation to save money, improve accountability, and be more efficient in choosing what gets repaired; issue bonds for an immediate one-time infusion of money to get investments started and create jobs; each year, automatically dedicate five percent of the General Fund and surplus revenue to rebuilding our roads.
This plan of action comes after three years of total neglect to South Carolina’s roads and bridges by Nikki Haley that have left only 15 percent of South Carolina’s roads listed as “in good condition,” left thousands of bridges so unsafe that they are classified as “functionally obsolete,” and made the state’s rural roads the most dangerous in the country according to a new study. The Governor has refused to release a plan on roads until after November’s election.
View Sen. Sheheen’s plan to rebuild roads and bridges, as well as his other ideas for how to improve leadership and accountability in South Carolina, at www.vincentsheheen.com. His book, “The Right Way: Getting the Palmetto State Back on Track” includes an entire chapter on improving transportation infrastructure and is free and also available online, here.
Honest Leadership & Real Accountability to Rebuild SC Road & Bridges
Under Nikki Haley’s administration, South Carolina’s roads, bridges, rail lines, and waterways are in desperate need of repair after years of neglect.
South Carolina had the fifth highest rate of traffic fatalities in the country, according to the US Census. Our rural roads are the deadliest rural roads in the nation, according to a new report released this month. In fact, only 15 percent of our roads are classified as “in good condition” with thousands of our bridges so unsafe that they are classified as “functionally obsolete.”
South Carolina’s families, businesses and taxpayers in general deserve so much better from their government. South Carolina needs honest leadership and real accountability to responsibly fix the roads and bridges – we need a Governor who will make infrastructure a priority.
As a small business owner, and an attorney who has helped families and small businesses grow and succeed, Vincent understands that economic activity depends on a good and viable transportation system. Having reliable roads and bridges is vital to growing the economy from within and attracting companies from out of state. Similarly, as the father of three boys and a native South Carolinian, Vincent knows how imperative it is for families to have safe roads and bridges. Taxpaying citizens should not have to fear for their safety while driving down a road in their town or across a bridge in their community.  And we shouldn’t be embarrassed when visitors come to our state by our dreadful highways.
Adopt a “Fix It First” Approach
South Carolina has the nation’s fourth largest state-maintained transportation network. Additions place an increased burden on an already overburdened maintenance program. If we can’t afford to maintain roads we already have, how can we afford to build new ones? It’s time for honest leadership and a common-sense approach where we fix our roads first.
Vincent’s plan of action
  • Issue an executive order to require the Department of Transportation to adopt the Fix it First rule he has promoted in the Senate.
  • Appoint a Transportation Director to be accountable and use the limited resources to secure the safety of the existing roads.
  • Set benchmarks on Fix-It-First projects to tackle our most crumbling roads first. Hold the DOT accountable to those benchmarks and provide monthly updates on projects to improve transparency.
Transform how we pay to maintain our roads & bridges. 
Currently South Carolina is heavily reliant on the gas tax, which generates about $500 million per year and accounts for 71 percent of all state highway funding. But the gas tax is a declining source of revenue as cars become more fuel efficient. Increasing the gas tax is not going to solve our transportation funding crisis. To succeed, the state must diversify funding and weave together sources to responsibly invest over the long-term.  Because of historic underinvestment in our roads we need to create an additional dedicated funding source and issue bonds to jumpstart needed investments.
Vincent’s plan of action:
  • Issue bonds to fund long-term investment.
    • The use of infrastructure is enjoyed by generations of our citizens. Just like a family takes out a responsible mortgage to buy a house for their long-term success, bonding is a responsible way to invest over multiple years in the future that will help families and businesses alike. The use of bonds would allow the state to inject a tremendous one-time infusion of funds needed to bring our roads up to standards while using other sources of revenue to maintain their integrity.
  • Dedicate five percent of General Fund revenue for roads.
    • As a state, we must decide that road funding is such a priority to deserve a portion of general tax revenue — especially surplus revenue. As governor, Vincent would put forth a budget to phase in the automatic dedication of five percent of the General Fund and surplus revenue to Department of Transportation to repair our roads and bridges.
  • Investigate other sources of revenue.
    • Honest leadership means bringing people together and considering many new ideas while building a bipartisan coalition to move forward and deliver results. As Governor, Vincent will explore potential revenue sources to pay for the repair of roads and bridges, including:
      • Lease rest areas to private businesses to establish gas and food sales at rest stops and generate new revenue.
      • Investigate an out-of-state truck tax to gather funds from those out-of-state who use our roads but don’t pay anything to maintain them. This will generate funds and make South Carolina more competitive with other states’ approaches.
 
Make the Department of Transportation more accountable
People expect and deserve a government that works and works well – and when it doesn’t, they deserve real accountability. South Carolina can fund its priorities by cracking down on waste, mismanagement, and incompetence to put politics aside and focus on getting results.
Vincent’s plan of action: 
  • Restructure of the state Department of Transportation to make the director answer directly to the governor
  • Abolish the DOT Commission to allow the legislature and governor to manage and set road funding and policy and to increase accountability.
  • Increase oversight from the legislature so that with new leadership we could have real accountability.
  • Combine the State Infrastructure Bank with the Department of Transportation to provide a consolidated and accountable approach to road improvements and maintenance.
View this release online, here.

Yes, restructuring DOT — as we failed to do in 1993, and again in 2007 (because, in both cases, the General Assembly did not want to reform DOT) — is a great idea. It’s a no-brainer, something that should have been done long, long ago.

And I commend Sen. Sheheen for presenting a plan, instead of playing the game that Nikki Haley is playing — saying she’ll have a plan for us, but only after the election.

But if announcing your plan before the election means you feel compelled to avoid the most obvious way of paying for your proposal, then something important is lost.

Again, we have a way to pay for roadwork. It’s the gasoline tax. It has been held artificially, ridiculously low for far too long. There’s no need to run all over creation trying to find some other way to pay for infrastructure when we have a way to do it already. It’s a particularly bad idea to cut into funding available for all the other functions of government that don’t have a dedicated funding stream (“automatically dedicate five percent of the General Fund”), to pay for a governmental function that does have a dedicated funding stream — a common-sense one tied to use.

Another long and winding road to infrastructure funding

Several days ago now, Rep. Bakari Sellers responded to our discussion of funding for road construction and maintenance thusly:

I told him I’d take a look at it. Which I just now did. Here’s the summary of the bill:

TO AMEND SECTION 11-11-220, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE CONTINGENCY RESERVE FUND, SO AS TO REESTABLISH THIS FUND AS THE SPECIAL PURPOSES REVENUE FUND (SPRF), TO PROVIDE THAT THERE MUST BE CREDITED TO SPRF ALL YEAR-END SURPLUS STATE GENERAL FUND REVENUES NOT OTHERWISE REQUIRED TO REPLENISH THE GENERAL RESERVE FUND, REVENUES DERIVED FROM ELIMINATING VARIOUS SALES TAX EXEMPTIONS AND SAVINGS ACHIEVED FROM THE IMPLEMENTATION OF STATE GOVERNMENT RESTRUCTURING, AND TO PROVIDE THAT SPRF REVENUES MUST BE APPROPRIATED OR USED AS REVENUE OFFSETS IN THE ANNUAL GENERAL APPROPRIATIONS ACT WITH ONE-THIRD EACH FOR ROAD MAINTENANCE AND CONSTRUCTION, A STATE INDIVIDUAL INCOME TAX CREDIT, AND FOR ADDITIONAL FUNDING FOR SCHOOL BASE STUDENT COSTS; AND TO AMEND SECTION 12-36-2120, RELATING TO SALES TAX EXEMPTIONS, SO AS TO DELETE EXEMPTIONS CURRENTLY ALLOWED FOR TECHNICAL EQUIPMENT SOLD TO TELEVISION AND RADIO STATIONS AND CABLE TELEVISION SYSTEMS, MOTION PICTURE FILM SOLD OR RENTED TO MOVIE THEATERS, SOUTH CAROLINA EDUCATION LOTTERY TICKETS, THE EXEMPT PORTION OF PORTABLE TOILET RENTAL PROCEEDS, AND AMUSEMENT PARK RIDES INSTALLED IN QUALIFIED AMUSEMENT AND THEME PARKS.

You can read the whole bill here.

My immediate reaction is that this is yet another instance of going the long way around to accomplish something, instead of just going ahead an raising our absurdly low gasoline tax, which after all, is intended for this very purpose.

But at least Mr. Sellers will tell you what his plan is. Which is more than some will do…

Post and Courier on infrastructure funding

The Charleston paper had a commonsense editorial Sunday on road funding. The thrust, basically, is that pols need to stop tiptoeing around what needs to be done, and what needs to be done is to raise the gas tax. Excerpts:

Gov. Nikki Haley has a plan for highway funding that is long on promise and short on details. So far, the only known fact about the plan itself is that it won’t include a tax hike.

And the road funding plan won’t be announced until January, after the November election. Why not provide all the details now and have the highway issue become a meaningful part of the debate between Gov. Haley and her Democratic challenger, state Sen. Vincent Sheheen?…

So many legislators have signed the “no-tax pledge” that road advocates have been pitching a badly needed gas tax hike as a user fee increase. So far the hardheads in the Legislature haven’t been willing to recognize the dire need for road and bridge improvements….

But calls for SIB reform, or further improvements to DOT governance, shouldn’t obscure the general need for additional road funding. Or the fact that a gas tax increase is the best way for South Carolina to provide it.

If the governor has a better plan, we shouldn’t have to wait until January to hear about it.

All of that said, let me say one thing in the incumbent governor’s defense — maybe, sorta, kinda: Maybe the reason she won’t say what her plan is before the election is that she actually wants to do the responsible thing — raise the gas tax.

Oh, but wait — she said it won’t include a tax increase. So, never mind… I was just reaching here for something to be hopeful about…