The Conference Committee on H.3516, commonly referred to as the “roads bill,” held several meetings late last week in an attempt to work out a compromise between the House and Senate versions of the legislation.  The Conferees met again on Monday and signed a Conference Report to be submitted to both the House and Senate for approval.

After a lengthy debate, the Senate adopted the Conference Report on H.3516 late Monday night with a veto-proof majority vote of 32 to 12.  The House adopted the Conference Report on Tuesday afternoon by a vote of 99 to 20, also a veto-proof majority. After ratification, H.3516 will head to the desk of Governor Henry McMaster.  If Governor McMaster vetoes the bill, lawmakers could vote to override his veto by the end of the week.

The Conference Report on H.3516 includes:

FEES & REVENUES

Infrastructure Maintenance Trust Fund (IMTF):

• EstablishestheIMTF and allows interest income to be retained in that account to be used for repairs, maintenance, and improvements to the existing highway system.
  • All new revenue generated by H.3516 is credited to the IMTF.

Motor Fuel User Fee (MFUF):  $490 M by Year 10

• Increases the gas tax by 2 cents per-year for the next 6-years for a total increase of 12 cents after year 6.

Registration Fees:  $31.7 M by Year 10

• Increases the biennial motor vehicle registration fees for passenger vehicles and property-carrying vehicles with a gross weight of 6 tons or less by $16 and credits to the IMTF.

Infrastructure Maintenance Fee:  $74.4 M (In-State) / $22.7 M (Out-of-State) in Year 10

• Establishes the Infrastructure Maintenance Fee (formerly known as the Vehicle Sales Tax) as follows:
  • Starting July 1, 2017, for in-state – 5%, not to exceed $500, of the gross proceeds of the sale or fair market value if not purchased from a dealer;
  • Starting July 1, 2017, for out-of-state - $250 if registered in another state and then registered here;
    • These fees are deposited in a new “Safety Maintenance Account.”
  • Provides for minor exceptions;
  • $80% of the proceeds go to IMTF; and
  • Exempts owners of items who are serving on active duty, their spouses, and dependents.

Use of Infrastructure Maintenance Fee:

• Allows DOT to reduce allocations to State Program in proportion to amounts transferred to SIB and amounts required to fund the State Program maintenance requirements;
• DOT shall identify road and bridge projects to be financed through the SIB;
• $50 million used to finance bridge replacement, rehabilitation projects, and expansion/improvements to existing mainline interstates;
• Funds in excess of $50 million to be used to finance expansion and improvements of existing mainline interstates;
• Cannot be used to finance projects approved by the SIB prior to July 1, 2013;
• No local match is required; and
• Funds supplanted by this section to be used for prioritized bridge and resurfacing projects.

Registration Fees on Hybrids and Electric Vehicles:  $2.6 M in Year 10

• Effective July 1, 2018, a biennial registration fee of $120 on electric vehicles and $60 on hybrids will be established.

Motor Carrier Fees:  $10.6 M by Year 10

• Large commercial motor vehicles subject to the “road use fee” are exempt from property taxes;
• 75% of the revenues from the “road use fee” (and one-time fee) must be distributed based on the ratio of State and federal highway miles within a county compared to total State and federal highway miles in all counties as updated on a monthly basis; and
• Sends 25% of the proceeds to IMTF for use on expansion and improvements to existing mainline interstates.

Department of Agriculture Transfer:

• Allows DOT to retain revenues currently required to be transferred to the Department of Agriculture (for inspections) for Non-Federal Aid Highway Fund.

Act 98:

• Language in Act 98 of 2013 directing DOT to send $50 million to the SIB is repealed.

CTC

CTC Apportionment:  Adds $40 M in Additional Allocation Beginning in Year 5

• Increases CTC apportionment from the Motor Fuel User Fee by .03325 starting on July 1, 2018, until it reaches a cap of .0399, and this increase is required to be spent on the State Highway System; and
• Increases the donor bonus from $9.5 million to $17 million and allows for an additional allocation for the large urban counties receiving a donor bonus ($3.5 million).

TAX RELIEF

Motor Fuel Tax Credit:

• Allows owners to seek a rebate for up to five vehicles for preventative maintenance, including new tires, oil changes, regular vehicle maintenance and the like;
• Requires SCDOT to offset the payout of the rebate by transmitting funds to SCDOR in a phased-in manner, capped at $114M;
• Credits not claimed are reverted back to SCDOT and
• Sunsets after year 7.

Income Tax Credit:

• Institutes, after tax year 2017, a non-refundable individual earned income tax credit 125% offederalEITC.
  • Phased-in through six equal installments of .2083 of a percent.

Two-wage Earner Credit:

• Increases the current income limit for the two-wage earner credit from, $30,000 to $50,000 phased-in starting in 2018.
  • Maximum tax credit increases from $210.00 to $350.00.

Manufacturing Property Tax Assessment Ratio:

• Decreases the property tax assessment ratio from 10.5% to an effective 9%.

Tuition Tax Credit:

• Increases the current refundable income tax credit for tuition at both four and two year institutions by 50%, not to exceed $1,500 at a cap of $40 million in 2018 and every year after plus a cumulative amount equal to the percentage increase in the Higher Education Price index capped at 3%.

GOVERNANCE

DOT Commission:

• Adds another at-large appointment;
• Total number of 9 members serving on the Commission;
  • 7 Commissioners from the respective congressional districts within the State; and
  • 2 Commissioners appointed at-large by the Governor.
• Removes screening by the Joint Transportation Review Committee:
  • The 7 congressional district appointees must be by an affirmative (weighted) vote by both the House and Senate congressional delegation members;
    • If the delegation does not take action within 45 days, the appointee will be considered disapproved.
  • The 2 at-large appointments must be approved with the advice and consent of both the House and Senate (much like Ethics Commission appointments and must be transmitted through the Senate Transportation Committee for confirmation hearings;
• All 9 Commissioners will serve at the pleasure of the Governor and can be removed at-will;
• Commissioners may serve 8 consecutive years, with an option to come back after a 4-year break, but may not serve more than 12 years in total; and
• Commissioners serving on June 30, 2016, can serve out existing terms and can be reappointed if the 12-year rule has not been met.

Commission Responsibilities:

• Must hold a minimum of 6 meeting annually and provide a one week’s notice of all meetings;
• Chair can call emergency meetings with 24 hours’ notice;
• Meeting materials for regular meetings must be published 24 hours in advance;
• Commissioners may not enter into the day-to-day operations of the agency except in an oversight role with the Secretary and are specifically prohibited from taking part in the following:
  • Awarding contracts;
  • Selection of consultants or contractors;
  • Selection of a route for a specific project;
  • Specific location of a transportation facility;
  • Acquisition of ROW or other properties necessary for a specific project or program;
  • Granting, denial, suspension, or revocation of any permit issued by the DOT; and
• Members may not have any interest (direct or indirect) in any contract, franchise, privilege, or any other benefit granted or awarded by DOT during the term of the appointment or for one year after.

TRANSPARENCY & ACCOUNTABILITY

TAMP:

• Requires SCDOT to prepare a “Transportation Asset Management Plan;”
• $50 million must go to a rural road safety program on primary or FA secondary roads; and
• Requires DOT to report results to the General Assembly and to the public.

Act 275 Clean-up:

• Cleans up the 57-1-460 and 57-1-470 items that were missed in Act 275 to give the DOT the final decision on transferring revenues.

Transparency:

• Requires “Internal Audit Reports” to be published on SCDOT’s web page and the State Auditor’s web page; and
• Requires DOT to publish expenditures and a list of all companies the agency does business with and the amount spent on those contracts.