Introductions. Why Penny Taxes? 7/23/2013

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1 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

2 Types of Pennies: Infrastructure 1) Hospitality Tax 2) Local Accommodations Tax 3) Capital Projects Sales Tax 4) Transportation Sales Tax 5) 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

3 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

4 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

5 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

6 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 Who has a Local Accommodations Tax? Ridgeland s Tuten Park work with the county to build your community CAPITAL PROJECT SALES TAX 7

8 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

9 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

10 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

11 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

12 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

13 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 MILTON POPE 13