State Plays Shell Game With Local Governments

When people in more than half of South Carolina’s counties head to the polls on Nov. 4, they’ll find at least one question seeking voter approval on a local issue, generally seeking more tax money for local needs.
A few referenda ask voters whether Sunday alcohol sale should be allowed. But most seek permission from voters to determine whether they want to pay a penny more in sales taxes or borrow money for capital projects.
And why do they have to ask? Because state government generally isn’t doing part of its job. All of these referenda illustrate how state government is pulling the same trick the federal government has been doing for years — shifting responsibilities.
This is a contrived ploy by state legislators to look good for re-election. They essentially say, “Look at us, we lowered your taxes.” But in reality, reduced revenue sources cause cuts that lead to the need by strapped counties for local referenda to get things done. And that causes more local taxes, which more than offset any lowered state tax burden dreamed up by state lawmakers.
Yes, it’s a shell game of taxing proportions.
“This has been going on a long time,” said veteran lobbyist Bill Ross, who runs the S.C. Alliance to Fix Our Roads. “The state has been pushing it down to the counties for years. This is not new, but it is just becoming so critical that the counties have to be able to do something at the local level, particularly with roads and schools.”
Just look at Greenville County where residents are being asked for another penny in sales tax to fund $673 million in road and infrastructure needs. One city council member told the local newspaper that if the county doesn’t pass the special tax, “We’re looking at 50, 60, 70 years of not repaving state roads, and we have a tremendous challenge. Truthfully, if we do not [approve it], the chance of us getting a Fortune 500 headquarters or expanding our manufacturing business will be nothing. We will not be able to grow if we do not have infrastructure.”
The story is the same across South Carolina, which has an amazing $42 billion — yes billion — in road needs. In Lexington County, officials want a penny for pavement. Berkeley County officials want to extend a penny tax for $141 million in improvements. In Georgetown County, voters are being asked to fund more dredging, roads and capital improvements. Sumter County seeks a penny for progress, including more money for roads. And Lancaster County officials estimate 85 percent of the county’s nearly 900 miles of state-maintained roads need paving improvements. They want an extra penny in sales tax to pay for $41.7 million in improvements, two thirds of which would be to pay for repaving state roads.
Schools demand attention in other places, such as in Aiken County, which seeks an extra penny sales tax to pay for a little property tax relief, but mostly for $234 million in school capital improvements. More money for schools is being sought in Anderson, Cherokee, Dorchester and Kershaw counties.
In Charleston County, funding is so stretched that voters are being asked to approve two major referenda — one to extend the penny tax for schools for $540 million in construction, maintenance and technology, and another to borrow $108 million to build new libraries and renovate others. Why? Because no significant library capital improvements have been funded since before the Internet became a reality.
Clemson economist Holley Ulbrich says counties often turn to adding another penny in sales taxes because they’re frightened to raise property taxes. “That’s been beaten into them,” she observed.
But continued reliance on more sales taxes eventually will hurt and bite everyone in the behind, she said. It will erode the tax base because tourists won’t visit because of high sales tax rates. Residents who live near a border will cross state lines to get better deals. And others will turn to the Internet for purchases, which will hurt state retailers.
South Carolina legislators need to take a good look soon about how they are taxing so they can meet responsibilities, not just shift them to local governments.
Andy Brack is editor and publisher of Statehouse Report. He can be reached at: brack@statehousereport.com.