Some S.C. senators want more school districts to have the option of pursuing a sales tax to pay for school construction projects.
The Senate Finance Committee advanced a bill Tuesday, sponsored by state Sen. Harvey Peeler, R-Cherokee, that would allow school districts in all of the state’s 46 counties to ask voters to approve a 1-cent sales tax for building projects.
Currently only two counties – Horry and Charleston – now collect the 1-cent-on-the-dollar tax. The tax can be imposed for no more than 15 years before voters must be asked to reauthorize it. Combined, the two counties raised almost $136 million through the education sales tax in the 2012-13 fiscal year, according to the S.C. Department of Revenue.
That means school districts in Charleston and Horry counties have an advantage, Peeler said.
Under current law, the county where a school district operates must raise $7 million in accommodations taxes, imposed on vacation and other temporary rental properties, before it can ask voters to approve the sales tax for education.
Peeler’s bill would do away with that requirement, allowing any school district, regardless of a county’s accommodations revenue, to pursue the tax.
“I wanted Cherokee County to be able to enjoy what Charleston and Horry counties have been enjoying for years,” said Peeler, the Senate’s majority leader. “We don’t have a beach. We don’t have an ocean.
“We do have a ‘Yellow Mall,’ ” he added, referring to the name locals use for Gaffney’s outlet mall.
The Senate Finance Committee advanced Peeler’s bill Tuesday. But a fellow Republican, Sen. Kevin Bryant of Anderson, objected to the bill, making its road to passage tougher.
Bryant said the people who will benefit from the additional sales tax will push it, while “the poor fellow trying to find a couple of extra pennies in his pocket is at an unfair advantage. That’s why I’m against all these tax increases.”
Peeler said Cherokee County already uses a penny of its sales tax for education improvements, but that tax sunsets soon. His bill, if it becomes law, would allow his county to continue that tax while providing a way for school districts and technical college campuses to find financial support for building projects.
A handful of districts around the state, which do not raise $7 million in accommodations taxes, already have passed local legislation to increase their sales tax to pay for education projects, said Scott Price, an attorney with the S.C. School Boards Association.
But with the legality of local legislation – state laws that only apply to specific counties – increasingly being questioned, education leaders are looking for a permanent fix that will apply to all counties, Price said. Peeler’s proposal, which the School Boards Association supports, would give school districts “another tool” to meet building needs, Price said.
Sen. Tom Young, R-Aiken, said Aiken County schools would benefit, too, from an education sales tax. Young has a similar bill that allows some, but not all, counties to pursue the tax.
To qualify, counties would have to collect at least $750,000 in accommodations tax revenue, currently have no more than 2 percent sales tax levied and have only one school district in their limits. Young also wants some of the money raised to go to property tax relief.
Giving districts the option to pursue sales taxes, instead of property tax increases, to pay for school improvements would ensure that more residents are paying for improvements, Young said, adding his proposal could change again.
Critics say sales taxes are regressive and often are used to shift the tax burden to low-income residents from higher-income property owners.
But Young said the new tax only would be approved “at the option of the public if presented by the school district.”