South Carolina Localities Likely Won't Face $122M of Cuts

WASHINGTON - Lawmakers are not likely to approve $122 million in cuts to South Carolina's local governments after the municipalities campaigned against the measure last week, a state representative said Friday.

Rep. Gilda Cobb-Hunter, D-Orangeburg, said the 316 localities are likely to be "let off the hook" and not forced to lay off police officers and eliminate programs because of the cuts.

The House Ways and Means Committee passed draft budget legislation on Feb. 19 that cut South Carolina's local government fund by 42% and increased funds for education and health care providers.

"It is totally irresponsible for us to balance the budget on the backs of local governments, forcing them to increase taxes while the General Assembly has capped the amount of taxes [the state] can increase," said Cobb-Hunter, who serves on the Joint Bond Review Committee.

South Carolina needed to boost education and health spending to comply with requirements for aid in the federal stimulus package. The American Recovery and Reinvestment Act, signed into law Feb. 17, requires states to fund both K-12 and higher education in fiscal 2009-2011 in an amount that is no less than their fiscal 2006 levels.

Facing a growing budget deficit, South Carolina cut $334 million in education spending in the first six months of fiscal 2009, which began July 1, according to the state's Education Department.

Rather than cut the funds for localities, lawmakers are most likely to raise the cigarette tax, Cobb-Hunter said. Lawmakers last week proposed raising the cigarette tax to 50 cents, but the proposal was defeated.

The tax is the lowest in the nation at seven cents. But Cobb-Hunter said the possibility of a cigarette tax increase could be brought up again when the full House is expected to vote on the budget March 9.

However, the proposal could face an uphill battle. When Gov. Mark Sanford initially vetoed the fiscal 2009 budget last year, he said that any cigarette tax increase should be used to eliminate corporate income taxes.

The local governments railed against the proposed cuts last week. The South Carolina Association of Counties held a rally at the state house in protest last Wednesday.

Counties would suffer greater cuts than cities based on the fund's distribution. The state's 46 counties typically receive 83.3% of funds and the 270 cities receive 16.7 % of them before they are distributed to each issuer based on population.

Triple-A rated Greenville County, South Carolina's largest county, would lose $9.4 million, or 8% of its revenue, in fiscal 2010 if the cuts are approved, said county Commissioner Joe Kernell. The counties provide services for the state, like county courts and law enforcement, that the local government fund offsets, he said.

"We're providing services on the local level that are state services that these funds provide some funding for," Kernell said. "These services don't go away with the funding and that's what I think will put all counties at a distinct disadvantage."

Kernell said the county is not expected to issue more debt if the cuts are approved.

The state funding makes up a larger percentage of revenue for smaller issuers, said Reba Campbell, deputy executive director of the Municipal Association of South Carolina.

Greer County officials said they would lose $231,000 in revenue and would be forced to lay off seven entry-level police officers or firefighters if the cuts are adopted.

Camden officials said they would lose $92,000 and might be forced to lay off two police officers.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER