Study: High taxes have stymied growth in Columbia in the last decade
Property taxes in the Columbia area are the highest among large metro areas in South Carolina, and have stymied growth in the Capital City in the last decade.
That was a key takeaway of an 81-page property tax analysis commissioned by the City of Columbia earlier this year. The study — which cost the city $25,000 and was authored by Rebecca Gunnlaugsson, principal at Acuitas Economics and former chief economist with the state Department of Commerce — was initially presented to Columbia City Council in October, and was shared Wednesday in a discussion with the Columbia Chamber, the Building Industry Association of Central South Carolina, and the Central Carolina Realtors Association.
Gunnlaugsson’s study suggested that, in order for Columbia to become more competitive with places like Greenville and Charleston, the city, Richland County and Richland County’s school districts need to work collaboratively to reduce commercial property tax rates, lobby the state government to overhaul part of its tax code, combine city and county services that are overlapping, and develop a “cooperative financial approach” between the county’s school systems, among other steps.
Though City of Columbia property tax rates have actually gone down by 4.4 percent in the last decade, according to the study, the combined rate when factoring in taxes from Richland County and the county school districts puts Columbia above comparable cities in South Carolina. The combined commercial property tax rate in Columbia is nearly two times higher than Charleston, about 1.5 times higher than Greenville and 1.2 times higher than Rock Hill, per the study.
“In fact, Columbia’s commercial property tax rate equates to 3.2% of appraised property value, making it one of the highest rates in the nation,” reads an executive summary of Gunnlaugsson’s study. “Under these conditions, businesses are more likely to establish elsewhere.”
Among other findings, the property tax study points out population growth in Columbia has been flat compared to other large cities in the last decade. The City of Columbia’s population, which sits at just less than 132,000, has grown by 0.7% since 2010. By comparison, the population in the City of Charleston has grown by 14% during the same time period, while Greenville’s population swelled by 19% and Rock Hill grew by 12.2%.
The Columbia area’s population growth among working-age people — defined in the study as folks between the ages of 25 and 54 — also has been sluggish. That age group grew in the Columbia metro area by 2.5% from 2010 to 2018. Over the same time period, that demographic ballooned by 15% in the Charleston area, 33% in Greenville and an eye-popping 64% in the Rock Hill area, which is just over the state line from Charlotte.
“That’s particularly interesting, because Columbia has a significantly higher percentage of population ages 18 to 24, driven by the universities and their associated student population,” Gunnlaugsson said on Wednesday. “But that advantage fades out in the 25 to 54 age group.
“The question is, ‘Why?’ The area’s high property tax rates have come to the forefront of discussions behind one of the driving factors of the city and area’s slower growth.”
Columbia Mayor Steve Benjamin took part in Wednesday’s discussion of the tax study with the Columbia Chamber and area Realtors. He touted the fact that City of Columbia property taxes have edged down in the last decade (tax millage has largely risen through hikes from the county and area school districts), and noted the city recently was recognized by a national agency for its accounting practices for the sixth consecutive year.
But the third-term mayor also acknowledged that the findings in Gunnlaugsson’s study could be used to spark conversations that could help ease tax burdens in the metro area and spur growth.
The study said the city and Richland County should work “to identify overlapping services and improve operation efficiency.” Benjamin has been a proponent of merging the city and county governments, which could, among other things, address service overlaps.
“I support consolidation of government,” Benjamin said Wednesday. “I do. I think that ought to be on the table as a legislative option, something we should pursue and find a way, long-term, to bring our governments together and, over the course of a number of years, dramatically reduce our tax rates. We can do a lot more working together in a much more defined way.”
District 4 Columbia City Councilman Daniel Rickenmann was a key proponent of the city undertaking a deep dive study of Columbia’s taxes and competitiveness with other state regions.
“This is so we could get a good grasp of where we stand and how we can look forward through the windshield and create an opportunity in Columbia for us to grow and be more competitive in our state,” Rickenmann said Wednesday. “This is really a group effort by the city to really take a look and figure out how we can continue to be competitive, and what’s holding us back.”
Columbia Chamber CEO Carl Blackstone noted the tax study could serve as a launching pad for local government and the business community to find ways to bring growth in Columbia up to levels that rival other large cities in the state.
“The glaring data shows we have been outpaced by every part of the state, whether it’s Greenville, Rock Hill, Charleston,” Blackstone recently told The State. “If we want to turn that around, we are going to have to put some energy and time into making sure the fix is there and we can start working on improving our situation. I think it is a well done study, and the city ought to be commended for being open to do it.”
This story was originally published December 17, 2020 at 5:00 AM.
