By Kristen George

COLUMBIA -- Local governments may find it harder to attract businesses if a proposed bill, which could limit local government spending, is passed.

The Local Government Fiscal Accountability and Fairness Act, H 3615, sponsored by Garry R. Smith, R-Greenville, came before a House Ways and Means subcommittee last week eliciting strong debate on the controversial bill. 

The Economic Development, Capital Improvement and Other Taxes subcommittee examined the bill, which if passed would impose annual spending limits based on increases in consumer price index and population for each jurisdiction.

Those against the bill say it will jeopardize economic development in the state, hindering local governments’ ability to make capital improvements and provide the services necessary to attract industry to their communities. Supporters of the bill say it will cause governments to be more judicious about their spending, and subsequently will lower unfair taxes.

“I wasn’t surprised at the tremendous amount of people who wanted to have their say on this issue,” said Rep. Adam Taylor, R-Laurens.

Representatives from about 20 different organizations attended the meeting to speak about against the bill. Only about five of those people were able to speak before the committee was being forced to adjourn due to time constraints, Taylor said.

Groups such as No Home Tax and the South Carolina Association of Taxpayers spoke in favor of the bill, he said, while representatives from municipal and county governments spoke against it.

“(The bill) could be very detrimental to communities,” Taylor said, pointing out that the bill’s lack of exception for capital improvements could severely cripple communities’ ability to provide the infrastructure and public services expected by both current and potential residents and industry.

Taylor cited the towns of Laurens and Fountain Inn, which he represents, as examples of how a spending cap could hinder economic development statewide.

“Those towns have great access to the interstates, but a lack of infrastructure for things like water and sewer,” Taylor said. “I believe if we had the infrastructure, we’d see a lot more industrial recruitment. But if we need $5 million to run a sewer line up I-385 to create an industrial park, under this bill proposal it’s likely we couldn’t do it.”

Howard Duvall, executive director for the Municipal Association of South Carolina, spoke strongly against the bill, saying it would “stop economic development in the state South Carolina if you put artificial restraint on local government spending.”

One of the bill’s major faults is that it treats each town equally based on its population rather than its individual situation, Duvall said. As an example, he cited Myrtle Beach and Greenwood, both of which have populations close to 22,000. That population total, however, only represents Myrtle Beach’s permanent residents and doesn’t take into account the massive tourist influx the city experiences each year.

“Myrtle Beach cannot be subjected to the same spending limits as a city like Greenwood and continue to be able to provide the types of services that draw hundreds of thousands of tourists to our coast each year,” Duvall said. “It all comes back to cities being able to provide the services our citizens depend on.”

In addition, Duvall said the population forecast that would be used to determine the caps don’t take into consideration the rapid population increases in coastal towns like Mount Pleasant, which in the last 10 years as seen a population growth rate of nearly 60% over the last 10 years, as compared with a 15% growth rate statewide.

Emerson B. Read, chairman of the grassroots organization No Home Tax that actively supports the elimination of property taxes, spoke in favor of the bill, saying it would have virtually no effect on economic development and would actually help to attract people and businesses to the state by making housing more affordable through lower property taxes.

“There’s a lot of waste in government spending, but if you limit what they can do they’ll be more responsible about where they spend their money,” Read said. “I don’t see any way this will affect economic development. In fact, I think we’ve lost people because they come in and see how high our property taxes are and they don’t want to relocate here.”

Citizens concerned about government overspending already have a built-in safety net because governments are elected bodies, Taylor said.

“The city and county governments are elected just like we are (at the state level), and by the same people we are elected by, so if the residents of districts aren’t happy with their local governments, they have the opportunity to make a change at the polls,” Taylor said.

He noted that the bill is unlikely to advance this year since the current legislative session ends in just four weeks, but the bill will be on the table for the next session.

“We need to study this bill further,” Taylor said, “We need to see where some changes can be made and consider it next year.”