Fruman economist Robert Arden

The poor condition of South Carolina’s roads makes traveling more hazardous and costly, and hurts the state economically. But how do the competing road plans stack up economically?

To answer that, let’s compare the plan proposed by Gov. Nikki Haley and the one passed by the House for their effects on transportation infrastructure, other government programs, economic growth and tax burdens.

The Transportation Department has said the state needs an additional $1.5 billion annually. The governor’s plan generates $3.5 billion in the next 10 years from a 10-cent per gallon tax increase that is phased in over three years. The House plan is similar but generates several hundred million dollars more in the first two years as it does not have a phase-in period. Both cut other taxes in addition to raising them.

Transportation infrastructure

The House plan initially provides more funds to repair the roads, which is the main objective.

Other government programs

The House plan would require fewer cuts in other government services to balance the budget than the governor’s plan. The House plan includes a small income tax cut, but when fully applied, in 2025, the governor’s plan would cut state income tax revenues by about a third. This large tax reduction would have substantial negative effects on other government services.

Economic growth

Spending on infrastructure under the House plan is likely to generate more economic growth than the governor’s plan due to its faster implementation and greater funding of the roads.