- Associated Press - Friday, May 5, 2017

COLUMBIA, S.C. (AP) - A legislative panel approved a road-funding compromise Friday that would increase South Carolina’s gas taxes by 12 cents over six years and eventually generate more than $600 million annually for construction.

The agreement, reached after hours of negotiations over the House and Senate’s separate plans, gets legislators steps away from a long-term funding solution for roads - an issue they’ve called a top priority for years.

“This has been a long time coming,” said House Majority Leader Gary Simrill, R-Rock Hill, who’s led the House’s road-funding efforts since 2014. “We are on the precipice to make history in South Carolina and make South Carolina a better state to do business, a better state to live and drive.”

South Carolina’s gas tax hasn’t increased in 30 years. The agreement would eventually increase it to 28.75 cents a gallon.

The House and Senate still must pass the compromise. Doing so will require two-thirds approval in each chamber, which will be needed again to override Gov. Henry McMaster’s promised veto. The Senate will take up the agreement Monday.

“Let’s get this all the way across the finish line,” Simrill said.

The compromise lets South Carolina drivers recoup the extra money paid at the pump through tax rebates, capped at $40 million the first year. Drivers could claim the reimbursements through their income tax returns. The cap would rise to $114 million in year six, then sunset. The Legislature would have to pass another law to continue it. The caps are far lower than the Senate plan passed last week, which allowed drivers to recoup up to $465 million.

Earlier in negotiations, Simrill called the rebate a “great game show concept” that raided money meant for road construction.

Other fees increased by the compromise include the sales tax cap on vehicles, which rises from $300 to $500. People moving to South Carolina would have to pay $250 to newly register their vehicle. The agreement also creates new fees for hybrid and electric vehicles.

The compromise reduced the tax cut provisions in the Senate plan. But it still expands tax credits for college tuition, cuts property taxes for manufacturers, and reduces income taxes for low-wage workers and married couples filing jointly. Estimates for how much those pieces will reduce revenue to the state coffers were not immediately available.

The committee’s House members had criticized the Senate’s tax rebates and cuts.

“What we’re talking about is a road funding bill that’s been hijacked” by efforts to cut taxes, said House Ways and Means Chairman Brian White, R-Anderson.

If the economy doesn’t grow enough to cover the cuts, legislators in the future may have to cut education and health care and “take cops off the street” to address the hole, he said earlier Friday.

But each tax-cut provision was needed to cobble together support in the Senate, said Sen. Larry Grooms, R-Charleston, who crafted the plan that passed the Senate.

“This whole process could’ve stopped today,” he said. The agreement’s reduced cuts may still cause some senators to drop their support, he said.

The committee rejected the Senate’s provision tying gas taxes to inflation after the six-year phase-in. Under that plan, the tax would rise as much as 2 percent a year, provided the tax stays below what neighboring counties in Georgia and North Carolina charge.

Without that inflation factor, “we’ll be revisiting this again at some point,” warned Sen. Paul Campbell, R-Goose Creek.

If legislators had linked the tax to inflation in 1987, drivers would be paying 34 cents a gallon, and the debate that has occupied the Legislature for years wouldn’t be necessary, Campbell said.

House members said they wouldn’t want it that high.

Georgia’ tax rose to more than 31 cents a gallon in January, following a 2015 law that linked that state’s fuel taxes to the Consumer Price Index. North Carolina’s increased to 34.55 cents, which is 10th highest nationwide. Pennsylvania has the highest fuel tax, at 58.2 cents a gallon, according to the Washington-based Tax Foundation.

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