Legislature Shortchanges South Carolina

The state legislature has been shortchanging us for years.  And we’re the culprits who have allowed it by playing along like pawns and feeding a diet of anti-tax complacency to legislators.
Despite the fact that South Carolina has one of the lowest tax burdens in the nation, state lawmakers believe they’ll be thrown out of office if they even think of raising taxes.
And because they’re deathly afraid of taxes, they’ve actually cut state revenue sources time and time again to the detriment of a lot of needs.  As such, South Carolina has been falling behind other states.  Just take a look at a few impacts of failing to have enough in tax revenue to fuel investments in the state’s infrastructure and future:
Education:  Over the last 10 years, state lawmakers have fleeced public education of mandated formula funding by almost $2.9 billion.  Using the Great Recession as a crutch, the last five budgets — including the one being currently developed — have provided millions of dollars less in base student costs than required by state law.  [Legislators did, though, provide required funding in the previous four cycles.]
Roads:  Experts say that South Carolina’s system of bridges and roads — the fourth largest state-supported system in the country — is crumbling and needs a lot of work.  Over the next 20 years, the system needs $29 billion in maintenance to bring it back up to snuff.  Over the previous 20 years, state lawmakers have refused to raise the per gallon tax on gas.  If it were brought up to the same level as neighboring states, the state Department of Transportation would have an extra $400 million to $500 million to fix the problems.
Sales Taxes:  State lawmakers continue to exempt lots of stuff from sales taxes.  A few years back, about 55 percent of everything sold had sales taxes tacked on.  Now, it’s about 42 percent, economists say.  Because the sales tax base has gotten smaller, there’s less money to fix problems.  It’s not a coincidence that South Carolina exempts more from sales taxes — about $3.1 billion in potential revenue — than it takes in.
 Income taxes:  Of the 1.1 million income tax returns filed in the Palmetto State, about 40 percent of filers pay no income taxes at all — either because they have so little income (19 percent of South Carolinians live in poverty) or because of various credits.  Result:  More burden on the middle class and a less progressive system to offset the inherent unfairness of existing sales taxes.
Armed with this information, you’d think it would be pretty clear that South Carolina has some serious problems with generating enough revenue to do some of the basic things that government does — educate children, build roads, provide protection, help generate opportunity.
But while the legislature turns a blind in many ways, you wonder what a group of reasonable people would do if they were armed with similar information.
Last month, Statehouse Report conducted budget simulations with a cross-section of leaders in Florence and Sumter.  While they didn’t have political pressure on them to keep taxes low, just about every group came to the exact same conclusion:  Generate more revenues by making a few budget cuts while raising revenues at the same time.
For the record, these diverse groups mixed with conservatives and liberals weren’t shy.  Their suggested revenue hikes averaged about $500 million a year with one group going as high as $1.2 billion.
Here are the kinds of things these groups suggested increasing:  Raising the cigarette tax to the national average; cutting sales tax exemptions on phones and electricity; removing the state’s $300 car sales tax cap and adding a new income tax bracket of 8 percent on incomes of $250,000 or more a year.
Bottom line:  South Carolina has a lot of work to do.  Groups of informed South Carolinians quickly figured that out.  Lawmakers should learn the same lesson.  Continuing to ignore the problems like they did in the session that ended Thursday will fuel a downward decline of our society.
 
Andy Brack is publisher of StatehouseReport.com, which you can visit to find sources of all of the data.  He can be reached at:  brack@statehousereport.com.