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Subcommittee Weighs Pros and Cons of Local Option Sales Taxes for Cities
This week, the Senate Finance Sales and Income Tax Subcommittee chaired by Senator Ronnie Cromer (R-Newberry) took up municipal tax relief legislation (S.171) sponsored by Senator Greg Hembree (R-Horry).  The bill would allow a municipality to impose a 1% local option sales tax for property tax relief and capital improvement projects. (20% of the revenues generated must go towards property tax relief, and the remaining 80% would go towards capital projects.)
  • Capital projects include but are not limited to roads, storm water, water/sewer projects, buildings, and beach renourishment.
  • The bill also caps the cumulative rate of state and local sales and use taxes in any portion of a county area to 9%.
  • The municipality could only impose the local option if a county-wide referendum failed – or if the local governing body of the county passes an ordinance that they do not object to the imposition of a local option at the municipal level.
Senator Hembree said areas in his district generate significant economic benefits for the state and that this bill would be another “tool in the toolbox” to allow local jurisdictions to keep up with needs.  Ultimately, Hembree asked the subcommittee to carry the bill over so that local concerns regarding impacts on the taxes in Horry County could be addressed. Hembree added that his intent was not to have one funding mechanism adversely impact another.

Subcommittee members also heard testimony from local government officials from across the state, including the Mayor of Florence, Stephen Wukela, who testified that there are significant capital needs in the City of Florence, with the greatest need being roads.  Mayor Wukela said that the city currently has a $100 million liability when it comes to road projects.  The county of Florence imposes a local option sales tax for roads that generates roughly $140 million. Wukela stated that the city generates 70% of those revenues and only receives $20 million - which is not enough to adequately address road needs in the city.

Greenville City Councilman Russell Stall (At-Large) also testified in support of the bill.  Stall noted that Greenville was among the few counties in South Carolina that did not impose a local option sales tax for capital projects. He pointed out that the county tried to pass a local option several years ago, but the effort failed because 70% of the votes against came from outside of the city.  Stall added that he didn’t see a countywide referendum passing anytime soon.

Stall said that by allowing cities to control their own destiny, Greenville could address an underfunded transportation system (transit), affordable housing needs, and provide additional property tax breaks to continue revitalization.

Senator John Scott (D-Richland) expressed some concerns with the 9% cap given that many coastal areas and urban areas across the state were already close to reaching that cap.

Jimmy Gray, Director of Government Affairs for the Myrtle Beach Area Chamber of Commerce, thanked Senator Hembree for requesting that the bill be carried over and noted that there were some concerns with language in the bill related to tourism development fees.

Senator Cromer told the subcommittee that more work needed to be done on the bill and the subcommittee carried the bill over so concerns that were raised could be worked out.  Stay tuned…

House Talks Sales Tax Reform
The House Tax Policy Review Committee met Thursday to continue discussions of tax reform policies.  Speaker Pro Tempore Tommy Pope (R-York) who chairs the committee, said that they plan to move forward with income tax and sales tax reform legislation in the coming weeks.

Thursday’s meeting focused on sales tax reform, and Rep. Pope noted that letters had been sent from several groups regarding concerns with removing current sales tax exemptions.

While the tax policy committee does not plan on taking testimony on the issue, Pope said that groups would be given the opportunity to testify once a bill is introduced and is taken up by the Ways & Means Committee.

Rep. Pope said that with the current education reform debate, the committee’s hands were tied when it came to addressing property taxes.  He emphasized that the committee needed to look to clean up the current sales tax exemptions while being mindful of the impacts of the existing exemptions. For example, the motor fuel exemption and the cap on vehicle purchases were substantial exemptions and would generate a significant amount of revenue; however, these categories were addressed in the road funding bill and will likely be very difficult for the legislature to go back and revisit.

Based on the discussion, it seems as if the will of the committee is to introduce a bill that would reduce the sales tax rate – possibly to 3% while carefully addressing exemptions.  It is also likely that the removal of any exemptions would be phased in.

The committee intends to send a very broad bill to Ways & Means along with a series of recommendations. It is important to remember that a bill has not been introduced and no language has been drafted and presented by the committee.  It is expected that things will get moving after the House takes up the budget.  (The budget will be debated on the House floor the week of March 11.)

SCDOT Begins Procurement Process for Carolina Crossroads
The South Carolina Department of Transportation has issued a Request for Qualifications (RFQ) to solicit Statements of Qualifications (SOQs) from proposers interested in contracting to serve as the Design-Build Team for the design and construction of the Carolina Crossroads I-20/26/126 Corridor Improvement Project (Carolina Crossroads).

Often called “Malfunction Junction,” the I-20, I-26 and I-126 interstate corridor is the crossroads of the state economy and serves as the major hub for the Midlands’ commuters, travelers, and commerce. The Carolina Crossroads I-20/26/126 Corridor Improvement Project is the number one statewide interstate priority for South Carolina. When complete, the Carolina Crossroads Project will improve mobility and reduce traffic congestion in the corridor. The project is expected to cost between $1.4 and $1.6 billion and consists of 14 interstate miles, 12 interchanges and spans I-20 from west of the Saluda River crossing to the Broad River; I-26 from Broad River Road to US-378; and I-126 from I-26 to east of Colonial Life Boulevard.

“The release of this RFQ is a major milestone in the delivery of the Carolina Crossroads project and SCDOT’s ten-year strategic plan,” said Secretary of Transportation Christy Hall. “This is the first step in the design-build procurement process which will evaluate the qualifications and experience of proposers in delivering projects of similar size and complexity.”

The RFQ can be viewed on SCDOT’s Design-Build website at

Deadline for submission of SOQs is April 25, 2019. Submissions will be reviewed and the most qualified teams will then prepare and submit technical and cost proposals. These proposals will be evaluated to determine the team who offers the best combination of quality, innovation, and price to construct the project. A final selection will be announced in spring 2020 and construction is anticipated to begin in 2020.

Leaders Exploring Proposal to Raise Highway 501 at Lake Busbee
Local officials are interested in possibly extending, or raising, the bridge at Lake Busbee that crosses near the Waccamaw River to include the portion of the road most likely to flood in a Hurricane Florence-like event.  Secretary of Transportation Christy Hall estimates the cost of the project to be around $100 million, but added that such a proposal is still in the very early idea stage, joining other ideas to improve roads like Highways 22, 378, and 701.  Read the full coverage here.
Chao & Congressional Leaders Tell State Officials it’s Time to Invest in Infrastructure
Transportation Secretary Elaine Chao endorsed a congressional push to invest in the nation’s infrastructure in remarks before a gathering of state transportation officials this week.  “We need to address these challenges because our nation’s prosperity, public safety and our public infrastructure have never been more intertwined,” Chao said, underscoring that “how to pay for” infrastructure needs would have to be resolved.

Chao's speech to the American Association of State Highway and Transportation Officials (AASHTO) was preceded by Republican and Democratic leaders of the two principal House and Senate committees, who vowed to provide bipartisan support for the effort. 

Officials heard from Senator John Barrasso (R-WY), chairman of the Senate’s Environment and Public Works Committee; Senator Thomas R. Carper (D-DE), ranking member on the Senate committee; Rep. Peter A. DeFazio (D-OR), chairman of the House Transportation and Infrastructure Committee; and Rep. Sam Graves (R-MO), ranking member on the House committee.

Many funding mechanisms were discussed including a vehicle miles traveled or VMT fee, wider use of tolling, and a hike in the federal fuel tax.

Rep. Graves stressed that Chairman DeFazio has set “an aggressive schedule” to get a transportation infrastructure funding bill done this year, with a deadline on May to get a bill delivered out of the committee.

“In terms of how we pay for it, everything is on the table: from tolling, which I am not a fan of, to changing over to a VMT which I am,” he said. “In my opinion, we’ll need to spend a lot of political capital to get it done – and raising the gas tax will be tough. We’ve never indexed the gas tax [to inflation] and that’s one of the biggest problems we have [because] the reality of politics makes raising taxes very hard.”

Full coverage of the AASHTO meeting can be found here.
Alabama Governor Proposes 10 Cent Fuel Tax Increase
Alabama Governor Kay Ivey announced her "Rebuild Alabama Infrastructure Plan" at a press conference this week, alongside a host of legislators, stakeholder groups and other state and local officials.

The Rebuild Alabama plan proposes a 10-cent increase in Alabama’s fuel tax with an index designed to coincide with the rising costs of building roads. The state currently imposes a flat excise tax of 18 cents-per-gallon on gas and 19 cents-per-gallon on diesel, without adjusting for inflation and other construction and maintenance costs.

This combined fuel tax revenue generates 80 percent of Alabama’s transportation funding. The plan’s 10-cent increase will be phased in over the next three years.  Read the full story here.
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