The gas-tax is a flat tax and is based on the number of gallons of gas used. This means it is unaffected by the price of gasoline on the open market. As prices go up, vehicle miles traveled trend downward, gasoline consumption is reduced, and ultimately the revenue generated by a gas-tax may be reduced. Increased mile per gallon economy standards on automobiles and alternative fuel vehicles can cause downward pressures on the gas-tax revenues generated as well. Essentially the purchasing power of South Carolina's infrastructure investment is continually being eroded by inflationary pressures and the inelasticity of the gas-tax as a revenue stream.
Between 1992 and 2002, 28 state legislatures had the foresight, courage, and leadership to start addressing their respective states' transportation needs by increasing the gasoline user-fee. Ohio (6-cents in 2003) and North Dakota (2 cents in 2005) have joined in. Several states including Florida, Kentucky, Maine, Nebraska, New York, and our northern neighbor North Carolina have attempted to overcome the inelasticity of the gasoline user fee described above by indexing rates to inflation. Maine and North Carolina have indexed their respective variable rate user fees specifically to the Consumer Price Index (CPI).
If the SC legislature in 1987 would have implemented an index using CPI on the entire 16 cent user fee, South Carolina would be very close to the national average (28.4 cents per gallon) for state gas-tax user fees. We would have had the added benefit of using these road improvements long ago. Our needs would not be as large as they are today. This argument does not even consider how many lives could have been saved over that time with this kind of investment.
Implementing an index on the gas-tax and/or fees related to transportation would help maintain the purchasing power of this investment over time. Ideally the transportation funding stream should be stable, diverse, and inflationary proof. This would allow contractors and the SCDOT to plan more efficiently and meet increasing needs compared to the current funding system which experiences a continual reduction in purchasing power.
There are numerous highway research studies that offer convincing evidence that both the national and local road systems are deteriorating faster than we can maintain them. Want proof? Simply take an extended ride on any thoroughfare in this state and most anyone that pays close attention can identify maintenance, engineering, and/or capacity needs that need to be addressed. If the public could see underneath some of the bridges that they routinely ride on, there would be a public appeal for increased funding based solely on safety concerns. The bridge collapse in Minnesota should be a clue. Do we have to wait for a similar tragedy here in SC before the public demands something is done about improving our highway system?
The South Carolina Legislature needs to take action in the upcoming session to begin the reduction of these enormous maintenance and capacity needs. General funds, sales taxes, indexing, and user fees all should be in the discussion. Bottom line, the needs are real and the costs to maintain and improve the highway infrastructure are only going to rise as we continue to delay action. The transportation system affects all aspects of life in South Carolina including business, tourism, economic development, jobs, and the safety of our children. It is way past time to start addressing this transportation crisis with the importance it deserves and the only way to do that is to fund the system adequately.
By David Herndon
Executive Director
SC Asphalt Pavement Association
and
Executive Committee Member
SC Alliance to Fix Our Roads
*Highway Statistics were provided by SCDOT and the American Association of State Highway and Transportation Officials (AASHTO) documents “Future Needs of the U.S. Surface Transportation System” – February 2007 and “Revenue Sources to Fund Transportation Needs”- September 2007.