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Listen to bond attorneys on gasoline tax cut plan

Sanford should drop the idea and do better by state's taxpayers

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Gov. Mark Sanford and his staff should heed bond attorneys critical of Sanford's proposal to eliminate the state gasoline tax for three months.

It was a bad idea to begin with and smacked of election-year pandering, but to dismiss the opinion of seasoned bond attorneys takes the idea's absurdity to a new level.

Eliminating the state's gasoline tax could threaten the state's credit rating, cut money for projects in the works and reduce the amount the state could borrow to build and repair roads and bridges in the future, according to lawyers the state pays to look out for bonds it issues.

Sanford spokesman Joel Sawyer says the governor's office disagrees with the bond lawyers. They "are paid to read the law in what some would say is an overly restrictive way."

No, these are the people we pay to watch out for our interests. Thank goodness someone is looking at this in a prudent way. It probably helps that the bond attorneys aren't up for election this year.

While Sanford's reaction is telling, it probably doesn't matter in the end -- at least not for this year.

After Sanford proposed a Memorial Day-to-Labor Day suspension of the state's 16.8 cent-a-gallon gasoline tax, the House approved a gas tax break for October, November and December. But that was expected to die Tuesday. It's not part of the budget compromise plan a budget conference committee is expected to send to the House and Senate for approval this week.

Sanford and the House planned to make up for the gas tax break with surpluses generated from faster-than-expected revenue growth.

It should be noted House members are up for election this year, too.

Sawyer says the legislature can move money around "in a way that protects taxpayers and bondholders."

But that seems a bit cavalier when it comes to contractual obligations that bonds represent, not to mention the limits on borrowing laid out in the state constitution.

The state has contracts with bondholders spelling out how those revenue bonds are to be repaid, said Wayne Corley, a McNair Law Firm lawyer in Columbia representing the state Transportation Infrastructure Bank. The debt repayment plan is a factor in the risk rating the bonds have.

"If such revenues are not available to the (bank) for payment of its revenue bonds, it may have a negative impact on such ratings," Corley wrote in a May 17 letter to Senate Finance Committee Chairman Hugh Leatherman, R-Florence. The Legislature, Corley wrote, "may not enact legislation which would impair the rights created under this existing contract."

The state's bond rating already has taken a hit. Last summer, Standard & Poor's Ratings Services lowered the state's AAA credit rating to AA-plus. A lower bond rating means it could cost South Carolina taxpayers more to borrow money through higher interest rates.

All that to save $3.02 on an 18-gallon fill-up?

The governor, his staff and the House can do better than that.