South Carolina’s transportation infrastructure is funded with federal dollars and state revenues generated from motor fuel user fees and vehicle-related fees.
Federal Funding plays a critical role in funding our transportation program. It accounts for a significant amount of South Carolina’s transportation budget. The primary funding source for federal highway investment in the United States is the excise tax on motor fuels.
- Federal Excise Tax on Gasoline: 18.4 cents per gallon
- Federal Excise Tax on Diesel: 24.4 cents per gallon
These revenues are dedicated to the Highway Trust Fund (HTF). However, due to decreased buying power over the years, the fund has been dependent on revenue transfers from other sources to remain solvent.
State Revenue Sources
South Carolina’s transportation infrastructure revenue sources come from state motor fuel user fees and other vehicle-related fees.
- Motor Fuel User Fees: The primary source of state revenue is the motor fuel user fee (gasoline and diesel). On July 1, 2017, the motor fuel user fee of 16 cents increased to 18 cents. The fee will continue to increase each year by 2 cents until it reaches 28 cents per gallon in 2022. All funds from this increase go to the Infrastructure Maintenance Trust Fund (IMTF).
- Biennial Registration Fees: $16 of the biennial registration fee for passenger vehicles goes to the IMTF.
- Registration Fees for Alternative Vehicles: Biennial registration fees from alternative vehicles ($60 for hybrids; $120 for vehicles that do not run on fuel) goes to the IMTF.
- Infrastructure Maintenance Fee: Fee imposed on purchasing a vehicle or transferring vehicle registration from another state. The fee is 5% for in-state purchases (capped at $500) and $250 for out-of-state transfers.
- Road Use Fees on Motor Carriers: In January 2019, the property taxes for interstate commercial vehicles over 26,000 lbs. was rolled into the existing registration process as a “Road Use Fee.” A portion of these fees (25%) will be allocated to the IMTF and used to expand and improve existing interstates.
- DMV Fines and Fees: Many fees related to licensing and titling requirements are allocated to the SCDOT for road and bridge projects across the state.
- Other Revenues: The SCDOT also receives revenues from fines, tolls, and trucking permits.
The Infrastructure Maintenance Trust Fund was established by Act 40 of 2017. All revenues deposited into the fund MUST be used exclusively for repairs, maintenance, and improvements to the existing transportation system.
County Transportation Committees
A portion of state fuel taxes goes directly to counties via C-Funds allocated to County Transportation Committees (CTC).
CTCs are a partnership between the state and the counties to fund local transportation projects and improvements to state and county roads and city streets. Generally, members of the CTC may be appointed by their respective legislative delegation or governing bodies at the local level. The CTC is responsible for determining how money is spent across the county.
C-Funds are allocated based on a formula that takes into account land area, population, and rural road mileage.
By law, CTCs must spend at least 25 percent of their C-Funds (2.66 cents) on the state highway system for construction, improvements, and maintenance. The new money implemented under Act 40 (an additional 1.33 cents to the C-Fund) must be used exclusively for repairs, maintenance, and improvements to the State Highway System.
Local Option Taxes
South Carolina counties are authorized to impose various local option taxes in addition to the 6 percent sales tax imposed by the state. The two local option taxes that can be used for roads are the Capital Projects and the Transportation sales tax.
Capital Project Sales tax: This method has proven to be very popular and is the most widely used. Funds can be used for a variety of capital needs, including roads and bridges.
Transportation Sales Tax: This method is all-encompassing. It provides funding for everything from roads and bridges to mass transit and greenbelts.
In order to impose either of these taxes, voters must approve the measure by a referendum, which clearly outlines when the tax begins, ends, and the projects that will be included. If a county wishes to reimpose, they may bring another referendum before voters.
Local option sales taxes are a way to supplement state funding, and they have proven to bring improvements to areas much faster than waiting for projects to appear on a list at the state level.