South Carolina governor Henry McMaster has proposed selling Santee Cooper. He and a panel of legislators are meeting throughout the fall to decide whether to sell the state-owned utility. In the past there have been numerous studies done to justify the privatization of Santee Cooper.
The entity can be privatized either by becoming a new independent utility or by being purchased by another utility. Privatizing Santee Cooper would be a wonderful – shifting a huge amount of utility and non-utility assets from government ownership to private ownership.
Although the prospect of this action conjures up positive reactions from most people, there is a negative that should be considered.
The property taxes paid on Santee Cooper’s large lakefront property holdings and utility assets are currently less than those same assets would be if owned by a private company or utility. If Santee Cooper goes private it would be unrealistic to level the playing field by expecting a cut in property taxes for their utility competitors.
Therefore, should privatization take place, local area governments can be expected to get a windfall in new property tax revenues. It would only be fair that all utilities be taxed the same. Therefore, plans need to be in place to mitigate the large transfer of resources in the form of property tax revenue from the private sector to the government sector. The last thing we want is more revenues flowing from the productive and efficient private sector to the wasteful and corrupt government sector.
The solution is legislation that freezes local tax revenues requiring a cut in property tax revenues to other local taxpayers equal to the new Santee Cooper tax revenues.
SIC SEZ …
Jim: Thanks for the letter and I appreciate you continuing to lend this news outlet your expertise on this matter. While FITS has advocated for the sale of Santee Cooper for the past eleven years, I agree with you that under the current circumstances such a transaction might not be feasible – meaning some sort of management agreement might be the best pathway forward. I don’t especially like this alternative, but with lawmakers refusing to sell this asset – and no one offering up anything resembling a competitive offer to buy it – I am not sure where that leaves us. As for the latter part of your letter, I very much like your proposal to offset new corporate property tax revenue with property tax cuts to individual residents.
WANNA SOUND OFF?
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