Cities, counties want extra $70 million from state

South Carolina’s local governments want an extra $70 million from state taxpayers next year, but some state representatives don’t want to give it to them.

That $70 million increase, required by state law, will be on the table when House budget writers begin work today on a budget proposal for the state’s fiscal year that starts July 1.

Because of slowly improving state revenues, lawmakers will have more money available for that budget. And state law says local governments should get more of those growing revenues. But a proposal before House budget writers today would suspend that law, meaning cities and counties might not get more money.

Cities and counties say not giving them more money from the so-called “local government fund” will pinch critical local services, including police protection and garbage pickup.

But some lawmakers say state government is sending hundreds of millions of dollars a year to local governments already, including almost $550 million a year to offset property-tax relief for homeowners that the Legislature passed. They also caution that most of the extra money available for next year’s state budget already is designated for other things, including health care and college scholarships.

“I don’t think we’re looking to reduce the local government fund,” said state Rep. Brian White, R-Anderson, chairman of the House Ways and Means Committee and a sponsor of the proposal to suspend the state law saying local governments should get more money. “It would give us flexibility not to have to fully fund it.”

Since 2008, the amount that the state sends to cities and counties via the local government fund has been cut nearly $100 million a year. Some of that cut was because of the Great Recession and the shortfalls in the state budget, which triggered cuts to the local government fund.

But with state revenues again rising, state law says the amount of state money sent to local governments should rise, too.

However, state Rep. Jim Merrill, R-Berkeley, says automatic increases for local governments are not sustainable. “The local government fund was put in place a while back without a whole lot of thought in terms of budgeting.”

The stalled local government fund hurts county governments more than city governments because 83.3 percent of the state money goes to counties.

For example, Orangeburg County’s portion of the fund has been cut by $2 million, forcing the county to raid its reserve funds, officials say. Recently, the county depleted its savings accounts so much that, in February, two bond-rating agencies downgraded the county’s credit rating, meaning it will cost county taxpayers more to borrow money in the future.

Now, Orangeburg County administrator Bill Clark said the county’s “financial integrity” is at stake.

“You will see this story play out in many counties, particularly rural counties where the tax base has historically been agricultural in nature,” Clark said. “Lesser developed counties’ reliance on the local government fund is ... stronger than some of the more urbanized counties that have more developed tax bases.”

With an extra $900 million for next year’s state budget, Robert Croom, deputy general counsel or the S.C. Association of Counties, said it is “not unreasonable to expect full funding” for cities and counties.

But Merrill says that is not realistic.

“There’s like 80-odd other state agencies, Medicare, K-12,” Merrill said. “One of our jobs is to prioritize where we should spend money.”