COLUMBIA — South Carolina’s cities and counties collectively spent $600 million more than they collected in local taxes in the 2012 fiscal year, according to a new report released this week.
Since 2009, counties and cities have consistently spent more than they collected. The exception is school districts, which have not overspent their revenues since 2009. Other local government entities, like water and sewage districts, were not included in the annual Local Government Finance Report, compiled by the Office of Research and Statistics at the S.C. State Budget and Control Board.
City and county officials dispute those numbers. Robert Croom, deputy general counsel for the Association of Counties, blamed the deficit on reporting errors. Melissa Carter, lobbyist for the Municipal Association of South Carolina, pointed out the city revenues do not include money from water, sewage and power systems – often large sources of revenue for cities.
“I wouldn’t draw too much out of that,” Croom said. “It does not sound significant.”
The report comes amid growing tensions between state and local governments. State support for cities and counties has dropped $108 million since 2008 – a 17 percent decrease. That’s despite a state law that requires lawmakers to give local governments 4.5 percent of the state’s general fund, a law legislators have routinely voted to suspend. Local government officials have complained, saying state mandates alone account for $600 million worth of their expenses.
A legislative committee – led by state Rep. Jim Merrill, R-Berkeley – is writing legislation to change how the state funds local governments. Merrill said Tuesday the committee has not met in two months because it needed to “take a little break from the hotheads.”
“It’s a self-defeating prophecy to keep going around and around and pointing the fingers and saying, ‘It’s your fault and my fault,’” Merrill said. “What we need to do is take an unbiased side of the taxpayers’ view of what is going on in the formulas we are using and then assign funding based on that.”
Other trends from the report:
• Local governments are relying more on commercial and rental property taxes to pay for government services. In 2002, commercial and rental property taxes accounted for 31.8 percent of all local government property tax collections. In 2012, those taxes accounted for 43.3 percent. From 2002 to 2012, commercial and rental property tax collections grew by more than $1 billion.
• Local governments are borrowing more money. Loan and interest payments for cities increased $207 million from 2002, an increase of 1,573 percent. County loan and interest payments increased 265 percent, or $204 million. Croom said the increase was due to local option sales taxes and penny sales tax increases that voters in various cities and counties approved during the last decade.
• Since 2007, cities spent less on administration while counties spent more. Administrative costs for cities declined by $21 million – or 5.4 percent – while county administrative costs rose by $65 million, or 9.2 percent.
Locally, Richland and Lexington county local governments reported they did not spend more than they collected in taxes. But Kershaw County local governments reported overspending their revenues by $11.1 million.