By Holley Ulbrich | Perhaps it is appropriate in celebrating the 40th anniversary of the Home Rule Act that the Legislature is contemplating two steps that would significantly impact local government revenues. One is the apparent intention to continue to underfund, if not defund, the Local Government Fund. This revenue cut impacts counties particularly hard, since the bulk of the funds are shared with counties, which have to provide a number of shared services with the state including libraries, court facilities, libraries and health departments. And, if another piece of proposed legislation passes, counties will play a larger role in financing the long overdue repairs to many of our roads.
But the latest attack on local government comes in H. 3490, which would severely restrict the use of business license taxes. If passed, this bill would primarily affect municipalities, which depend on business license revenue for a significant part of the budget. The business license tax, along with the local option sales tax, offers cities a way to collect from revenue from non-residents who come to cities to shop, dine, or work, and use a variety of city services that are in part financed by those two taxes.
They park, the create trash, they use public recreational facilities, they have auto accidents, they benefit from the street lights and signage, just to name a few. So the business license tax is a fair way to collect some of the revenue needed to run cities, and there is no apparent reason for meddling with it other than to generate a somewhat spurious claim that legislators have once again reduced their taxes. [Perhaps, truth in advertising, they should start adding, “and of course, I also reduced your public services.”]
Home rule is a long and honorable tradition in most states, a somewhat shorter but still honorable one in South Carolina. It means that we give our local elected officials the power they need to be both effective and accountable in providing local public services. If the citizens are unhappy with the way their city is being managed, they have recourse. Local officials are there all the time, and they regularly get an earful at the post office, the gym, or even church. I know. I have served on my city council. They are far more accountable to the voters both on a daily basis and on election day than either state or federal legislators, who are away in Columbia or Washington much of the time and are hard to dislodge once they have made it through an election or two.
So leave our local business licenses alone. If they are a problem, it’s a problem between the city and its citizens and businesses, and they can be trusted to work it out.
Holley Ulbrich of Clemson is a noted economist who is senior scholar at the Jim Self Center on the Future at the Strom Thurmond Institute at Clemson University.
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