As one of the state’s most powerful lobbying groups launched an effort to cut taxes and fees for S.C. businesses, a study released Tuesday said tax breaks for some businesses are costing Palmetto State school districts more than $300 million a year.
S.C. schools lost out on about $318 million in taxes as a result of tax breaks given to businesses in 2017, according to a new report from Good Jobs First, a Washington, D.C.-based watchdog group that tracks tax incentives across the country.
Four school districts in counties that are home to large manufacturers and their suppliers — Aiken, Anderson 5, Berkeley, Charleston and Greenville — accounted for nearly $146 million of that total, according to Good Jobs’s tally, based on information in the school districts’ 2017 financial reports.
Lexington County school districts 1 and 2, and Richland County’s two school districts accounted for another $48.9 million. Meanwhile, school districts in Calhoun, Fairfield and Kershaw counties lost another $7.4 million.
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“The premise of economic development subsidies is that they are supposed to make economies and communities stronger,” said Good Jobs’ Scott Klinger. “But if those subsidies are robbing schools of vital resources, the end result of subsidies is too often a less prepared workforce and a less competitive economy.”
S.C. schools would like to get that money, said Ed Carlon, Richland 1’s chief operating officer. But, he added, communities also need jobs.
The money — in Richland 1’s case, $13.1 million lost due to tax cuts given to businesses — could replace a third of student laptops, or help cover the costs of summer reading coaches and after-school support.
But, Carlon added, “I don’t look at it as if it’s a loss because what if they (businesses) didn’t get the tax breaks and then they didn’t come?”
State business leaders said Monday the state’s tax laws should be changed so that businesses and schools no longer are pitted against each another.
Meanwhile, influential state legislators called Tuesday for education reform during the Legislature’s 2019 session, an effort that could include looking at Act 388, the controversial 2006 law that shifted property taxes for schools off of owner-occupied homes and onto businesses, vacation and rental properties.
“Reform has to occur, and there has to be some tough decisions made,” state Chamber of Commerce chief executive Ted Pitts said Monday.
Legislators will have a buffet of choices when they return to Columbia in January.
Those options could include phasing out Act 388 or removing the sales tax exemption for some goods and services — for example, groceries. Those choices were outlined in a report released Monday by the state chamber, titled “South Carolina: A Road Map for Tax Reform,” steered by Washington, D.C.-based Tax Foundation think tax.
“Yes, it’s difficult to tackle (Act) 388. But leaving it off the table is not a responsible option either,” said the Tax Foundation’s Jared Walczak. “Tax reform has to work within the realm of the possible. But it also has to look at how to improve the situation for all taxpayers.”