Lakelands counties eyeing penny tax

Come 2016, multiple counties in the Lakelands could be collecting pennies.

Known as a penny tax, the capital project sales tax has become a common tool for local governments to collect a little extra to fund large brick-and-mortar projects.

Greenwood County Council Chairman Steve Brown announced earlier this year during his State of the County address the county will be pursuing the tax, which must be placed on the ballot for a referendum.

Capital sales taxes are typically placed on the ballot during a general election year. The county’s pursuit is no exception and it is expected to place it on the ballot for next year’s election in November.

Abbeville County has already put together a committee as required by state statute to review project requests after failed attempts to place the tax on the ballot a year ago.

McCormick County Council called a joint meeting for Monday with its municipalities’ town councils, Commissioners of Public Works and the legislative delegation to discuss a capital sales tax.

State statute requires the county to put together a commission to review the projects and form the referendum question.

Greenwood County’s commission makeup includes three members appointed by County Council with the remaining three seats made up of the county’s municipalities based on population, meaning the city of Greenwood takes two seats with Ware Shoals and Ninety Six sharing a seat.

The county must appoint the commission 30 days prior to the referendum. After the commission makeup, the rest essentially falls on the counties on how to pursue examining requests throughout the county.

Greenwood County Manager Toby Chappell said the county is still in the organizational stage, working on how the process will work and how it will receive proposed projects.

“We’re putting that organization together as we speak,” Chappell said.

Chappell said there are two primary reasons for pursuing capital sales tax, which are millage increase restrictions from the state and avoiding debt.

Act 388 puts a limit on how much counties and municipalities can raise property taxes, making it difficult to make large capital purchases, such as new fire stations and other public buildings.

“You can’t do this in a normal budget cycle without taking out any debt,” Chappell said.

The other bonus is avoiding debt and raising the funds in bulk for the big purchases with about 40 percent of the funds coming from people living outside of Greenwood County.

“The good portion of this money comes from people who do not live in Greenwood. We are the regional hub of this area,” Chappell said.

Brown previously announced possible projects for the county, including the implementation of the rural fire master plan, a speculative building for industrial and manufacturing recruitment, an advanced manufacturing training facility at Piedmont Technical College, Civic Center recreation complex revitalization and county road improvements.

“We are going to be like all the other entities. We are going to have a list of projects that we are going to advocate to the committee to be funded,” Chappell said.

The county had successfully passed a capital sales tax in 2006, taking effect in fiscal year 2008, and eventually raising about $43 million in less than six years. Each year ranged from about $8 million to about $8.6 million. A capital sales tax can be implemented for up to eight years and seven years if reimposed.

The county still has a fund balance of about $21 million, which could be used for any updates needed for the Buzzard Roost dam determined from the recent findings of a hydrology study.

The county used about $9.4 million to build the new library off Main Street. About $12 million was used to pay off the county’s remaining debt after savings from the first phase of work on the dam, which required just more than $1 million.

Chappell said the county has yet to determine how much the tax would raise now and is still working with the state Department of Revenue.

While county growth is evident, the tax revenue could be affected by the 2009 adjustment to state statute exempting unprepared food, such as groceries, from being taxed the 1 percent.

Originally Published by Index-Journal on:Oct 10, 2015

By COLIN RIDDLE criddle@indexjournal.com

 Article Link: https://www.indexjournal.com/news/lakelands-counties-eyeing-penny-tax/article_d408bca9-696b-5e38-9cf6-642cf4ad7d8d.html