Why South Carolina should pass this bill to change where your tax dollars are deposited | Opinion
South Carolina is built on strong communities, hardworking families and local businesses that drive our economy. However, state laws restrict where local governments can deposit taxpayers’ dollars, limiting necessary choice and convenience that allow for effective governance.
That’s why I introduced the South Carolina Financial Freedom Act (House bill H.3221) alongside two of my colleagues. It’s a bipartisan effort to give local governments the freedom to choose the financial institution that best serves their communities.
For too long, big banks, many of which have closed branches in the Palmetto State and are headquartered in other states, have held a monopoly over public deposits in South Carolina.
Under outdated laws, municipalities are forced to deposit taxpayer dollars exclusively in commercial banks, limiting options and preventing the possibility of better returns. This lack of choice in the public deposits marketplace means that 78% of all deposits in South Carolina end up in out-of-state banks, sending taxpayer money away from the very communities it should be helping.
By allowing local governments to bank with credit unions, this legislation would bring greater balance to the financial marketplace — driving better rates and services for taxpayers.
Local governments know their communities better than anyone. They understand the financial needs of their residents and businesses, and they should have the ability to bank with institutions that align with those needs. As local, member-owned institutions, credit unions are often more attuned to smaller municipalities’ challenges, offering personalized service and reinvesting directly in the community.
The South Carolina Financial Freedom Act isn’t about mandating where public funds must be deposited — it’s about allowing local governments to choose what works best for their citizens.
Financial flexibility is critical for local governments striving to make the most of taxpayer dollars. South Carolina’s current restrictions tie the hands of local officials, forcing them to work within a financial system that doesn’t always serve their best interests. In many cases, local governments must regularly send their staff on lengthy trips to the nearest commercial bank to make cash and check deposits — the same ones leaving our state — wasting valuable staff time and resources when a local credit union is already present in their community.
Allowing those local governments to use a nearby credit union could eliminate this inefficiency. This would enable them to focus more on serving residents rather than making unnecessary trips to a commercial bank that could be over 30 minutes away.
Expanding access to credit unions would empower municipalities to seek out the best interest rates, reduce banking fees and ensure that more public funds stay here in South Carolina, working for our residents.
This legislation enjoys strong support from organizations like the Municipal Association of South Carolina and the South Carolina Association of Counties. About two-thirds of 915 likely South Carolina voters surveyed in September by the Palmetto Public Deposits Coalition supported allowing local governments to deposit funds into credit unions, especially in areas where traditional banks have withdrawn.
The Financial Freedom Act is a commonsense solution that aligns our financial laws with the needs of today’s South Carolina.
The time to act is now. We must break down barriers that prevent effective governance, empower local leaders to make financial decisions that benefit their residents and ensure that taxpayer dollars are used effectively. I urge my colleagues in the General Assembly to support the South Carolina Financial Freedom Act. Let’s stand for choice, efficiency, and financial flexibility — because our communities deserve nothing less.
Together, we can create a financial system that works for all South Carolinians — one that reflects our state’s values and our people’s needs.