Gas Tax to Increase Again, but Officials Say It’s Not Enough

(TNS) — Starting in July, motorists will pay an additional 2 cents per gallon of fuel as part of an annual gas tax increase that will run through 2022 to help pay for road maintenance needs in the Palmetto State.

It's the fifth year of a six-year process to bring the gas tax from 16 cents to 28 cents per gallon.

But ultimately, the South Carolina Department of Transportation says it will need more money to keep up with the state's road maintenance and infrastructure needs.

SC DOT says it may need up to an additional $240 million a year to cover the ongoing infrastructure needs in the state.

"We are unprepared to deal financially with the rapid population, housing and economic development growth that is occurring within the state," Secretary of Transportation Christy Hall said.

Gas tax revenue has come in lower than what state economists estimated when lawmakers passed the road repair and improvements bill in 2017. Now a group of state senators are exploring how to pay for future needs, such as whether the state should increase fees on hybrid or electric vehicles to pay for future needs.

South Carolina has one of the lower gas tax rates in the Southeast.

Starting on July 1, motorists will pay 26.75 cents per gallon, an amount that is still lower than North Carolina's 36.35 cents per gallon and Georgia's 32.20 cents.

The long-term issue that DOT faces is improved fuel efficiency leading to motorists buying fewer gallons of gas along with more hybrid and electric vehicles coming onto the roads, leading to less revenue to the state DOT.

Senate Finance Committee members started looking at how to handle the need for increased funding and additional funding sources. The panel of lawmakers have a goal of proposing ideas on how to address the upcoming road issues by January, whether it be through increased user fees, registration fees or maintain discretion on how to use federal funds.
"I think a lot of times government is criticized, and rightly so in some respects, that they don't look forward enough. They don't look at what's going to happen in 10, 20 years down the road," said state Sen. Tom Davis, R- Beaufort. "They look at things that are more immediate. I think this is an example of where we should be proactive now and anticipate what happens."

In 2017, South Carolina started to phase in a 12-cent per gallon gas tax increase, the last year of which will take place in July 2022.

Lawmakers also added a one-time $250 vehicle maintenance fees for registering out of state automobiles of people moving into South Carolina, increased the sales tax on vehicle purchases, increased registration fees, added a truck fee based on miles traveled and truck value, and a $60 biennial registration fee hybrid vehicles and $120 biennial fee for electric vehicles.

The additional fees and gas tax increase allowed the state to increase highway construction work from $1 billion highway program in 2009 to $3.2 billion a year in 2021.

SC DOT says it needs an additional $240 million — $60 million a year for routine maintenance, $40 million more a year in bridge work around the state, $100 million a year for road widening projects and $40 million for matches for federal programs — to cover the state's growing road needs.

"Obviously we can't fix 30 years of decay overnight," Hall said. "It will take us sometime, but we're making good progress."

Among the projects SC DOT is planning is widening 33 miles of Interstate 95 north of the Georgia border, widening Interstate 26 east of Columbia and upgrading Interstate 526 in Charleston.

Those three projects alone are estimated to cost $7.1 billion to $9.1 billion.

Still Not Enough Revenue

Of the 3.2 million vehicles registered in the state, only 3,100 are electric. But in the future, the electric vehicle market share is expected to increase. By 2050, 60 percent of vehicles will be electric vehicles sold and 41 percent of vehicles on the road are expected to be electric.

South Carolina's electric vehicle registration fee is one of the lowest in the region.

But SC DOT estimates the fee should be $240 to $250 a year so an electric vehicle pays the same amount toward road maintenance as someone who has a traditional gas-powered vehicle.

State Sen. Larry Grooms, R- Berkeley, said the state ultimately needs to address two problems when it comes to electric vehicles — providing enough charging stations to support electric vehicles and loss of gas tax revenue to maintain roads.

Grooms said the state, which has seen it's population grow from 4.6 million people in 2010 to 5.1 million in 2020, fixed some of the issues with the 2017 road legislation, but work remains.

"Other things were taken care of, but our state is growing faster than we're able to keep up with, that was not addressed in the roads bill that we passed," Grooms said.

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