Bradley: Don’t Eliminate SC Local Government Fund
STATE MANDATES MUST BE ACCOMPANIED BY STATE RESOURCES
By Justin Bradley || Every taxpayer should pay attention to the attempts in Columbia by legislators to ignore their statutory obligation by raiding the Local Government Fund (LGF). Since 2009, our Republican legislators have voted to override the law and fund the local government fund at less than the amount required by law – 4.5 percent of the previous year’s revenues according to SC Code § 6-27-30.
This started as an understandable, but short-sighted, way to save money during the recession since revenues in 2009 were significantly lower than their peak.
However, this charade became very transparent this year, when elected officials in Columbia were scrambling to spend larger than expected revenue estimates on their pet projects while crafting the FY 2014-15 budget. This week, word leaked that Republican Representative Brian White, who chairs the House Ways and Means committee floated an idea at the House Republican Caucus meeting this month to eliminate the LGF completely.
Shouldn’t fiscal conservatives champion attempts by lawmakers to cut spending? Of course, but cutting the LGF does not reduce spending at either the state or local level. In fact, this action has had the opposite effect.
At the state level, lawmakers are not reducing the LGF to shrink the bottom-line. Instead, these dollars are being spent on other items. Even though lawmakers raided the LGF in this year’s budget, the end result was the largest spending plan in South Carolina history.
The impact on our counties and municipalities is much greater and requires a background on the LGF itself to understand the effect. The Home Rule Act in 1975 established county governments in South Carolina; however the Act did not completely cede complete control to the county government. Instead, counties were given a dual role: 1) as a local government providing local services, and 2) as an arm of the state providing state agency support. As part of the second role, the state has imposed numerous mandates on the counties, from providing facilities and personnel for state agencies to carrying out specific state functions.
One of the more ironic mandates is for the counties to provide an office for our county legislative delegation. As The Nerve recently reported, a county can avoid doing so but would be required make substitute payments directly to lawmakers.
The State Aid to Subdivisions Act, which encompasses the LGF, is intended to help local governments offset these costs and blunt the impact of property taxes when the county is performing a function of state government. When the LGF is not fully funded, counties are forced to make up the shortfall with county revenues, after taxpayers have already sent state dollars to Columbia for this purpose. These county tax dollars could have been spent on county functions, such as county roads or parks, or even returned to the taxpayers. Instead they are diverted to fund state services. In other words, taxpayers pay taxes twice – once to the state, and again to the county – but receive services only once.
One misconception is that the LGF means that local governments are flush with cash. In Spartanburg County, the LGF does not even cover the cost of the mandated functions. In 2009, the amount that should have come to Spartanburg County under the statute was $15.2 million. State mandates resulted in a net expenditure by the county on state functions of $15.1 million, which would have netted Spartanburg a $67,325 gain from the LGF. That year, legislators raided the LGF and Spartanburg actually received $13.9 million and county taxpayers had to come up with $1.2 million to pay for state functions and offset the cut.
The numbers have only become more severe over time. In FY14, Spartanburg County’s revenue under the statute should have been $13 million. If that had been the case, county taxpayers would have still been forced to come up with $1.3 million to cover additional state mandates. Instead, the revenue was $10.4 million and county taxpayers were forced to come up with $3.9 million to pay for state mandated functions.
In those instances, counties are left with two choices, raise taxes to cover the shortfall or cut essential services (which you, the taxpayer already paid for with the taxes sent to Columbia). Either scenario harms the taxpayer.
It is true that we could use more fiscal restraint in all levels of government, which is what motivated me to run for County Council. We need true reform, such as modernizing our budget process to tie spending to results and make elected officials more accountable to the taxpayer. However, these are debates we should be having at the local level, not in Columbia. Raiding the LGF is not the conservative position, especially if it forces counties into raising taxes. It only means lawmakers in Columbia are able to claim the title of fiscal restraint while forcing local officials to clean up their mess.
I welcome a real debate with Rep. White about home rule and ways to truly reform the system. But eliminating the LGF is yet another reform-in-name-only tactic by those in Columbia seeking to preserve their power in the status quo.
Justin T. Bradley is an incoming Republican councilmember in Spartanburg County. A corporate attorney who previously clerked in Governor Sanford’s office, Bradley ran on a platform of prioritizing spending and reforming county government.