AS COLUMBIA and Richland County continue to dole out millions in hospitality taxes annually to nonprofits, festivals and other attractions, we continue to lament the fact that this money can’t be put to its highest and best use.
While proponents tout the tax as a way to boost tourism, its narrow use makes it one of the most fiscally irresponsible funding streams available to S.C. local governments. Unable to spend the money on basic services, local governments are forced to conjure up ways to spend it, which is why we see so many grandiose as well as dubious plans materializing.
What if the city could use some of that money to hire more police officers? What if Richland could use some to equip and staff the $50 million worth of improved parks it is struggling to fund?
Columbia and Richland collect roughly $16 million each year — about $11 million for the city and $5 million for the county — from the 2 percent tax on prepared foods. Any endeavor funded via the tax must be “tourism-related,” a term not defined in state law. So, just about anything that draws someone from a block away appears eligible; at least that’s how it works in Columbia and Richland County.
For sure, legitimate tourists draws such as the Columbia Museum of Art, EdVenture and the Township are funded. But millions also are spent on parks, nonprofits and projects designed for local residents, not tourists.
We never thought Columbia and Richland should have enacted the tax, in large part because we feared it would become exactly what it has become — a slush fund, and a sizable one. The clamor for these dollars has worsened over time as groups have grown dependent on them for their very existence and local officials have sought to use the money for big-ticket items such as the city’s planned minor league baseball park and the county’s proposed water park.
One key problem with the tax is the haphazard way in which the governments distribute it. Consider Columbia’s process: On one hand, a panel screens organizations requesting money from a pot set aside for community groups; applicants must disclose financial, attendance and other records. But the City Council gives minimal scrutiny to those that receive line-item funding in the hospitality budget. Still others come through the back door, sometimes at the last minute, and get funded. Some city officials wisely favor a formal process for everyone.
But the biggest problem with the tax is that it ties the hands of city and county elected officials, who have such limited means of raising money for essential services. By restricting the use of this money, lawmakers — and they must rectify this matter — have robbed local officials of the freedom to govern their own communities. Why give them the authority to raise revenue but then require them to spend it on frills while higher-priority basic services go wanting?
Museums, parks and the arts add to quality of life, and ballparks and water parks might draw tourists, but none of them should trump basic service needs.