McMaster Issues Vetoes, Touts Infrastructure Investments

Legislators plan to return to Columbia on Tuesday, June 28, to take up the line-item budget vetoes before approving the FY22-23 budget that goes into effect on July 1. 

Governor Henry McMaster praised the legislature for the allocations to roads and bridges approved this year through ARPA funds and the budget, stating:

"Our State's booming economy and rapid population growth have outpaced the State's ability to keep up with improvements to our transportation infrastructure. There is no infrastructure more in need of big, bold, and transformative one-time investments than our State's roads, bridges, highways, and interstates. This year, almost $1 billion in State and federal American Rescue Plan Act (ARPA) funds have been appropriated to the Department of Transportation to accelerate construction, expansion, or improvements to our State-owned roads, bridges, highways, and interstates..."

We applaud Governor McMaster and the legislature for prioritizing infrastructure this year. We look forward to the budget's final approval next week, so South Carolina can put these dollars to work. 

In all, Governor McMaster issued 73 vetoes to the budget. (29 of these were $1 placeholders leftover from budget negotiations.) His rationale for each included duplicate requests, lack of sufficient information on how funds would be used, and a few because he felt local money should be used instead. View the entire veto message and line items here. 

JBRC Approves Use of ARPA Funds for I-26

The Joint Bond Review Committee (JBRC) met Tuesday and approved using the $453 million ARPA allocation to SCDOT for interstate project acceleration. Specifically, the funds will be allocated as follows:

• $150,000,000 to widen I-26 to 6 lanes between Exits 194 and 187;
• $300,000,000 to widen I-26 to 6 lanes between Exits 125 and 136; and
• $3,499,758, and any funds remaining to the Carolina Crossroads Project on Interstates 20, 26, and 126.

These allocations will allow SCDOT to accelerate the widening of I-26 between Charleston and Columbia by six (6) years, with all phases of work under contract by 2029 as opposed to 2035.

SCDOT anticipates letting the I-26 segments between Exits 187 and 194 and 125 and 136 in September 2022 and November 2023, respectively.

The fiscal capacity created by this funding is expected to accelerate the schedule to widen I-95 between the Georgia border and South Carolina Exit 3, presently planned to be let by 2031, by one (1) year.

Members of the JBRC praised the work of SCDOT and were very supportive of the efforts to accelerate the projects.

Rep. Leon Stavrinakis (D-Charleston) pointed out that the $450 million was only addressing 16 miles of interstate and said that everyone needed to recognize this and understand how much projects cost and how much they will cost in the future.

Senator Katrina Shealy (R-Lexington) offered an apology to Rep. Stavrinakis for her comments at a previous meeting when she questioned the cost of the road work in Charleston. Based on her recent trip to Charleston, she said, "They need to spend some more." Senator Shealy joked to SCDOT staff, "However much y'all want to spend down there, fix it!" 

Rep. Gilda Cobb-Hunter (D-Orangeburg) inquired about the needs on I-26 in Orangeburg County. She said she appreciated Secretary Hall and her creative use of funds and ability to expedite this timeline. She added that I-26 becomes a parking lot depending on the time of day and urged SCDOT to utilize any funding available through the feds that could be used to fill in these remaining gaps on I-26 to unclog traffic.

SCDOT Deputy Secretary for Finance & Administration, Justin Powell, said that by accelerating these projects, other projects in the pipeline also move up. Because the ARPA funds have time constraints on use, the I-26 and Malfunction junction projects best fit the time frame for using these funds. SCDOT can utilize the one-time budget allocation for rural interstates ($133.6 million) toward the I-95 widening.

Clarity for Local Fees Becomes Law

Governor McMaster has signed S.233 into law, providing clarity to local road use fees across the state. The bill includes the language of Senator Greg Hembree's (R-Horry) bill (S.984) which aims to end all uncertainty and legal chaos since the Supreme Court ruled Greenville's local road use and telecommunications fees invalid last year. 

Specifically, it codifies the elements for local fees established in Brown v. Horry County (1992) and removes the requirement that the fee benefits the payer differently from the general public. It also includes provisions to ensure counties that immediately repealed fees and increased taxes do not automatically re-impose fees.

We appreciate the Governor's support to provide clarity on this issue and alleviate the uncertainty that has plagued local road programs since the 2021 Supreme Court ruling. 

Biden Proposes Gas Tax Holiday

President Biden is calling on Congress to suspend federal fuel taxes for three months (through September). He is also urging states to take similar action to provide some direct relief through fuel tax suspensions or helping consumers in other ways.

The administration believes the Highway Trust Fund can be held harmless by using other revenues to compensate for the estimated $10 billion price tag on the suspension. 

However, to date, the proposal has received a lukewarm reception from Congress. 

President Biden also called for fuel companies to pass on "every penny of this 18 cents reduction to the consumers," but the federal government has no mechanism to make sure that's happening. 

As we have previously reported, there is no guarantee that these suspensions will be passed on (or arguably noticed) by consumers in the retail price. Research has shown that approximately 18% of a state fee is actually passed on to the consumer. 

While the intent and promise to backfill lost revenue is a noble cause, there is a bigger issue with suspensions at ANY level of government. Fortunately, our friends at ARTBA have done a great job of summarizing why this is poor public policy:

• The federal gasoline tax is the single largest revenue stream that supports the federal highway and public transportation investment commitments from the 2021 infrastructure bill. 
• Pausing collections not only jeopardizes the bipartisan compromises that enabled that landmark measure, but such a maneuver would establish a precedent that these user fee revenues could be halted whenever elected officials feel the price of gas is too high. 
• There would be no guarantee that the fuel tax would return and no guarantee that any future suspensions would include reimbursement for lost highway and transit program revenue.

In essence, this sets a dangerous precedent. And it is for this very reason that we do not support suspensions at the state level. South Carolina cannot get in the business of suspending dedicated revenue streams to combat inflation. 

Primary Run-offs are Tuesday, June 28

• Voters who voted in the June 14 Primaries are limited to voting in the same party’s runoff.
• Voters who did not vote on June 14 can choose to vote in either party’s runoff.

There is one statewide race going to a runoff, and it continues to be one of the most competitive races in the state. Kathy Maness and Ellen Weaver are facing off for the Republican nomination for the Superintendent of Education. The winner of Tuesday’s runoff will face Democrat Lisa Ellis in the November election.

Rep. Krystle Matthews (D-Dist. 117) and Catherine Bruce are vying for the Democratic nomination for the US Senate. The runoff winner will face incumbent Senator Tim Scott (R) in the November election.  

There are several runoffs for the SC House coming up on Tuesday. An overview of each is below: 

Out of five democratic candidates, Wendell Jones and Derrick Quarles will face off to be the Democratic candidates for House seat 25. Jones received 31% of the votes on June 14, and Quarles came away with 29%, with only 28 votes between them. This seat is currently held by retiring Rep. Leola Robinson-Simpson (D). The winner of the run-off will face opposition in November.