I had a great discussion with Craig Dewey, host of The Facts on KCPO TV, which airs today.
We talked about the upcoming legiative session, my new position on the Judiciary committee, and various issues that will be decided this year. We spent considerable time discussing the proposed $100 million tax increase for highway funding.
Proponents of the plan say that if we don’t fix our roads and bridges now, costs of repair will escalate in the future and we will need even more funds over the long term. Also, fuel taxes per mile driven have actually declined over time creating a shortfall in available funds.
On the one hand, many believe that infastructure is the most basic function of government. And, if it ends up being true that investing $1 now will mitigate $3-$5 of costs in the future, a conservative approach would direct resources towards roads today to ensure resource availability for other areas tomorrow.
But it’s also important to consider this proposal in a broader context. The Governor announced in his budget address that sales tax revenues came in below estimates, signs that the Fed’s money printing and phony stimulus bubble is showing signs of bursting. This would be the largest tax increase in South Dakota history, at a time when our national debt, inflation, and economic situation have gotten even more dangerous and I am predicting will see another severe correction in 2015.
As far as the specifics of the proposal, there are a few concerning points that jump out immediately. I am opposed to the wholesale (hidden) tax increase that switches from cents per gallon to a percentage basis. It creates volatility, automatic gas tax increases when gas prices rise and consumers are already hurting, and places a unnecessary burdens on businesses to upgrade or replace their software systems. Also, if we are going to continue to lean toward user fees as a better way to fund government, I believe our structure should better reflect that heavy trucks may, according to one study, do up to 99% of the damage to roads, while paying around a third of the revenue.