Groups that benefit from tax money have reason for optimism, as steady increases mean more revenue for public use.
The U.S. Census Bureau earlier this month reported state government tax revenue increased 6.1 percent nationwide from 2012 to 2013. That bump follows a 4.7 percent increase from 2011 to 2012 and a 7.3 percent jump the prior year. The $846.2 billion state government tax revenue in 2013 is a record high.
All but two states saw a revenue increase last year. A survey released annually since 1951 contains tax collections on all 50 states, breaking them down into 25 categories like revenue on income, sales tax and severance tax.
“The (survey) provides an early look at the fiscal status of our state governments,” said Cheryl Lee, chief of the Census Bureau’s State Finance and Tax Statistics Branch. “Governments and businesses can use these statistics to make policy and investment decisions.”
Sales tax revenue rose to $254.7 billion last year, up 3.9 percent from 2012. Only North Dakota, at 13 percent, ranked higher than South Carolina for the largest percentage increase in sales tax revenue. South Carolina grew those funds by 9.3 percent.
Sales tax is an important economic driver in York County. Voters have approved a local 1-cent sales tax for road construction three times beginning in 1997, creating Pennies for Progress. When state legislators passed Act 388 in 2006, it shifted school operations funding from residential property tax to a 1-cent sales tax, plus nonresidential property taxes.
Unincorporated areas like Lake Wylie and the Carowinds area of Fort Mill charge a 2 percent tax on food and beverages for use on hospitality projects. York County Council is hammering out an ordinance to more clearly define that process now. Municipalities in York County have their own hospitality taxes to pay for festivals, promotions and other events there.
While the road funding and hospitality taxes allow for as many projects as taxes bring in, schools have a certain number of students that isn’t set by revenue. They have to make the revenue fit the number of students and services.
“Sales tax is only one component of the funding stream,” said Ken Love, finance officer for the Clover School District.
Leanne Lordo, assistant superintendent of finance and operations for the Fort Mill School District, said it’s difficult to quantify the sales tax impact since the district doesn’t directly receive it.
“Our funding is based on a combination of sales tax, income tax and property tax,” she said. “Funding has been steady over the past couple years, but still at a level much lower than needed to support the increase in growth of residential development we are seeing here in Fort Mill.”
Love has a hard time saying what he’ll see in state funding for next year, since the budgeting process in Columbia is only about half done. The past couple of years haven’t shown much increase, but there hasn’t been a drop either.
“From what we’re seeing in recent years with the amount allocated, it’s stable,” Love said.
According to the Census Bureau, South Carolina brought in $8.72 billion in total taxes for 2013. Sales and gross receipt taxes made up more than half that figure at $4.47 billion. Another $3.74 billion came from income taxes.
The state received $439 million in license taxes, $8.5 million property taxes and $51.7 million other taxes.
Schools say their intake from state sources is an improvement from the height of recession, but Act 388 still creates concern – particularly in areas like Clover and Fort Mill, where districts outpace many others statewide in new student enrollment.
“It is better,” Love said. “It’s not as bad as what we saw in ’07 and ’08. It’s not as good as it was prior to that.”
The Census Bureau report came a day ahead of another significant tax date for South Carolina. According to the nonpartisan Tax Foundation, South Carolina reached its “Tax Freedom Day” on April 9. South Carolina is the eighth state to reach the date this year, defined as the day a state’s collective earnings match what its residents must pay in federal, state and local taxes.
“Arguments can be made for why the collective tax bill is too high or too low, but in order to have an honest discussion, it’s important to understand where we stand,” said Tax Foundation economist Kyle Pomerleau. “Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels.”
The national Tax Freedom Day was Monday, April 21, three days later than it did last year.