Gov. Haley says her tax proposal represents an initial step in funding South Carolina roadwork

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COLUMBIA, South Carolina — Gov. Nikki Haley said Wednesday her proposal that eventually provides $394 million yearly for road and bridge work represents an initial step for funding infrastructure.

The Department of Transportation has said it needs an additional $1.5 billion yearly over the next two decades to bring South Carolina's 41,500 miles of state roads to good condition. But Haley said that figure includes "wants," and the state needs to focus on existing lanes.

"This is going to be the first step, but this is the most important step because it's bringing us to a level of repair where no one is going to complain about what we already have," she said.

Last week, she conditionally proposed a 10-cents-per-gallon gas tax hike for roadwork, but only if legislators cut the top income tax bracket by 2 percentage points.

Rep. James Smith, D-Columbia, said it's wrong to hold roadwork hostage to a tax cut scheme that primarily benefits the state's wealthiest residents without meeting the state's infrastructure needs.

According to state economic advisers, the cut would reduce revenue by $1.8 billion yearly once fully implemented in 10 years, saving taxpayers on average nearly $700. But 46 percent of tax filers — or 1.1 million — would see no benefit. They'd pay no state income taxes anyway, due to the Legislature's previous cuts to the bottom tax brackets. Meanwhile, the state's 380 wealthiest taxpayers would each save about $146,000.

Democrats say the plan Haley touts as the largest tax cut in state history could slash spending on important needs such as education and law enforcement. The $1.8 billion figure represents 25 percent of Haley's proposed spending plan for 2015-16. As it's phased in over the next 10 years, the cut is predicted to reduce revenues by $9 billion.

But Haley insists South Carolina can absorb the reduction through a growing economy. At a news conference Wednesday, three of her Cabinet appointees took turns backing their boss' proposal.

Such a major tax cut "will be a major selling point for us," said Commerce Secretary Bobby Hitt.

DOT Director Janet Oakley called Haley's plan "bold and courageous."

"What this is going to enable us to do is bring our most heavily traveled roads and bridges up to a state of good repair and keep them at a state of good repair," she said. "Over a period of time we'll be able to cut in half the number of substandard bridges on heavily traveled roads."

Oakley's comments seemed to contradict those she made two weeks ago, when she told business leaders it would take a commitment of $400 million a year just to stop the system from deteriorating further.

"If we were just going to arrest the further decay, that's what it would take," she said at the annual meeting of the South Carolina Business & Industry Political Education Committee. "We'd still have 30 percent of our interstates congested. We'd still have 20 percent substandard bridges. We'd still have only 29 percent of our people driving on good roads. But that's what it would take."

In the Senate on Wednesday, Senate President Pro Tem Hugh Leatherman told his colleagues that to gain his support, a plan must solve all of South Carolina's infrastructure problems, from interstates to rural roads. Too often, lawmakers take the easy way out and put a small bandage on a huge wound, he said.

"If we appear to address something in part, it takes it off the table. I don't want to go there," said Leatherman, R-Florence, also chairman of the Senate Finance Committee.

Jeffrey Collins contributed to this report.

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