7/23/2013
Ray E. Jones &
J. Milton Pope
Parker Poe Adams & Bernstein LLP
Parker Poe Consulting LLC
MASC Annual Meeting
July 20, 2013
Introductions
Ray Jones
– Bond and Economic Development Lawyer
– Partner in Parker Poe’s Columbia, SC office
– Carries Milton’s briefcase
Milton Pope
– Local government consultant for Parker Poe
Consulting
– Retired Richland County Administrator
– Former MASC staff member
Why Penny Taxes?
“The art of taxation consists in so
plucking the goose as to obtain the
largest possible amount of feathers
with the smallest possible amount of
hissing.”
Jean-Baptiste Colbert
King Louis XIV’s Minister of Finance
1
7/23/2013
Types of Pennies:
Infrastructure
1)
2)
3)
4)
5)
Hospitality Tax
Local Accommodations Tax
Capital Projects Sales Tax
Transportation Sales Tax
Education Capital Improvement Tax
Tourism-Related!
Types of Pennies:
Operating Funds and Property Tax Reduction
1) Hospitality Tax
2) Local Accommodations Tax
3) Local Option Sales Tax
a penny to tout tourism
a penny to boost your budget
without a penny of property tax
HOSPITALITY TAX
2
7/23/2013
Hospitality Tax
• up to 2 percent on prepared food and
beverages
• earmarked to be spent on tourism-related
projects, but funds can also go towards
transportation, water, sewer, police, and fire
protection related to tourism demand
• can be passed by simple majority vote of the
municipality governing body
Who has a Hospitality Tax?
Hospitality Tax
• Significant revenue
–
–
–
–
–
–
–
–
–
–
Rock Hill: $4 million per year
Anderson: $2 million per year
Easley: $1.2 million per year
Simpsonville: $1.1 million per year
Orangeburg: $1 million per year
Lancaster: $700,000 per year
Mauldin: $500,000 per year
Newberry: $500,000 per year
Travelers Rest: $350,000 per year
Abbeville: $200,000 per year
3
7/23/2013
How are cities spending H-TAX revenue?
Greenville’s Falls Park
How are cities spending H-TAX revenue?
Greenville’s Falls Park
How are cities spending H-TAX revenue?
Greenville’s Falls Park
• $13 million downtown renovation project
• $0 in property tax funding
4
7/23/2013
How are cities spending H-TAX revenue?
Georgetown’s Boardwalk
Renovations
Barnwell’s 16-acre
Lemon Park
How are cities spending H-TAX revenue?
Municipal Park Complex
How are cities spending H-TAX revenue?
• $1 million to build an
amphitheater in
Travelers Rest
• $50,000 to advertise
the South Carolina
Strawberry Festival in
Fort Mill
• $40,000 to replace the
roof of the Opera House
in Abbeville
• $10,000 to fund the
Freedom Blast festival
in Greer
5
7/23/2013
A penny to tout tourism
A penny to boost your budget
Without a penny of property tax
LOCAL ACCOMMODATIONS TAX
Local Accommodations Tax
• up to 3 percent on hotels and short-term
rentals
• earmarked to be spent on tourism-related
projects, but funds can also go towards
transportation, water, sewer, police, and fire
protection related to tourism demand
• can be passed by simple majority vote of the
municipality governing body
Local Accommodations Tax
• The best kind of tax:
– Taxing people who don’t live in your town
Lots of feathers. No hissing from taxpayers.
6
7/23/2013
Who has a Local Accommodations Tax?
Ridgeland’s Tuten Park
work with the county
to build your community
CAPITAL PROJECT SALES TAX
7
7/23/2013
Capital Project Sales Tax
• up to 1 percent on most sales within a county
• funds referendum-approved projects like
roads, bridges, municipal buildings, water and
sewer projects, flood control projects, etc.
• the county governing body must first approve
the capital project sales tax and a referendum
is required to approve the imposition of the
tax and the projects to be funded
Capital Project Sales Tax
• How municipalities can accomplish their goals:
– A 6-member commission selects the projects to
be funded by the tax
– 3 of those members are picked by the county
– 3 of those members are picked by municipalities
Counties levying a Capital Project Sales Tax
8
7/23/2013
Projects currently being funded by
Capital Project Sales Taxes
• New water plant in
Sumter
• Upgrade to Nichols Town
Hall
• New fire station in
Britton’s Neck
• New fire station in
Mullins
• New magistrate office in
New Ellenton
• New water main in
Newberry
• Sewer system
improvements in
Prosperity
• Library renovations in
North Augusta
• Exclusively used for road
projects in Florence,
Horry, and Orangeburg
counties
25 years of funding
to build your infrastructure
TRANSPORTATION SALES TAX
Transportation Sales Tax
• up to 1 percent on most sales within a county
• funds referendum-approved projects like
roads, bridges, mass transit systems, and
greenbelts
• County governing body authorizes a countywide referendum
9
7/23/2013
Transportation Sales Tax
• How municipalities can accomplish their goals:
– Funding decisions are typically made at the county
level, BUT
– Municipal leaders are in a great position to vouch
for the importance of certain transportation
projects within a municipality
Counties Levying a Transportation Sales Tax
• Only four:
– Berkeley
– Charleston
– Dorchester
– Richland
reduce property taxes
and increase your budget
LOCAL OPTION SALES TAX
10
7/23/2013
Local Option Sales Tax
• up to 1 percent on most sales within a county
• 71% of LOST revenue directly reduces
property taxes for your constituents
• 29% of LOST goes to the county and
municipality and is added as general revenue
– which can be spent on anything
• To enact, county governing body authorizes a
referendum
Local Option Sales Tax
• Other penny taxes:
– funds are restricted to specific expenditures or
projects
• Local Option Sales Tax:
– funds go to your general budget, so you get to
decide how to spend it
Counties Levying a LOST
11
7/23/2013
LOST Budget Impact
LOST as a percentage of general revenue
•
•
•
•
•
•
Florence: 18%
Dillon: 16%
Bennettsville: 13%
Lancaster: 13%
Hartsville: 12%
Darlington: 11%
•
•
•
•
•
•
Charleston: 10%
North Charleston: 9%
Mount Pleasant: 9%
Goose Creek: 9%
Hardeeville: 7%
Sullivan’s Island: 5%
LOST Budget Impact
Property Tax Revenue as a Percentage of General Revenue
Municipalities with LOST
• Lancaster: 31%
• Mount Pleasant: 29%
• Dillon: 25%
• Darlington: 21%
• Bennettsville: 18%
• Florence: 10%
Municipalities without LOST
• Anderson: 48%
• Mauldin: 47%
• Spartanburg: 41%
• North Augusta: 38%
• Lexington: 35%
• Greenville: 32%
• Hilton Head Island: 29%
• Greenwood: 27%
school district funding opportunity
EDUCATION CAPITAL
IMPROVEMENTS TAX
12
7/23/2013
Education Capital Improvements Tax
• Enacted in 2008
• Imposed by referendum for up 15 years
• Must be spent on specific approved education
projects
• Only counties collecting $7 million or more in
annual accommodations taxes may seek to
impose this tax
• So far, just Charleston and Horry
The End
RAY JONES
[email protected]
MILTON POPE
[email protected]
13