By RICK BRUNDRETT
Oconee County Council Chairman Matthew Durham will tell you he ran on a campaign promise of low taxes and limited government growth.
Durham, who was elected to County Council in 2020 and became its chairman this year, says he was alarmed that the county’s annual budget grew by 45% since 2016, contending that if limited to population growth plus inflation, overall spending during the period should have increased by no more than 22%.
So Durham joined last month with two other conservative council members in passing a fiscal year 2024 general-fund budget that totaled $60.7 million – $6 million-plus less than what originally was proposed for the fiscal year that started July 1, and nearly $231,000 less than the final amended budget for last fiscal year.
In a recent interview with The Nerve, Durham said he plans this year to push for passage of an ordinance that would limit future spending increases to population growth plus inflation.
“I’m not against spending money,” he said. “But everything should be justified. What is the taxpayer going to see for how this money is being spent?”
If passed, such an ordinance likely would be the first of its kind among counties statewide.
“We are not aware of any county ordinances of this kind,” Mary-Kathryn Craft, spokeswoman for the South Carolina Association of Counties (SCAC), said in a recent written response to The Nerve.
State law limits annual fiscal-year increases in county, local municipality and school district millage rates to population growth plus inflation, and caps increases in property reassessments every five years to a total of 15%. There also are homestead property tax breaks for seniors and exemptions for school operating taxes on owner-occupied homes.
But while those laws can limit revenue growth, nothing in state law directly caps spending at the local level.
And counties have been doing plenty of big spending in recent years, a review by The Nerve found.
Most of the state’s 46 counties – big and small – approved initial general-fund budgets from fiscal year 2017-18 to fiscal year 2021-22 that exceeded population-growth-plus-inflation caps had those limitations been in place, according to The Nerve’s review of SCAC records, county audits and budget records, and county budget ordinances.
Approved spending above the caps in 39 counties where records were available totaled nearly $129 million since fiscal 2018. The median spending amount above the caps –the midway point among the 39 counties – was $1.8 million over the period.
Overall, initially adopted general-fund budgets by the 39 counties for fiscal 2022 were nearly 6.5% more than the total $2 billion in population-and-inflation capped budgets for that year, The Nerve’s review found.
Last year, the South Carolina Policy Council – The Nerve’s parent organization – recommended implementing a “sustainable” budget at the state level, defining it as population growth plus inflation.
The Policy Council’s analysis, done with help from the Texas Public Policy Foundation, found that over the last decade, state general-fund appropriations grew by $76.5 billion, yet under the sustainable budget model, that growth should have been capped at $69.5 billion. That worked out to $7 billion in total overspending during the decade, or 15 percentage points over what would have been allowed under a sustainable budget.
By not following the sustainable budget model over the 10-year period, individual state taxpayers effectively carried an additional tax burden of $180 in 2022, the Policy Council’s analysis found.
Separately, the Policy Council in 2021 recommended that the governor enforce the law requiring state agencies to justify their entire requested budget amounts for the upcoming fiscal year when submitting those requests to the Governor’s Office.
The Nerve’s latest review assumed there was no wasteful spending in the initially adopted fiscal 2018 county budgets, which served as the base year in the review. If any of those budgets contained wasteful spending and if those amounts could have been eliminated for the purpose of the review, that likely would have increased the gap between the affected counties’ adopted and capped fiscal 2022 budgets.
Six counties in The Nerve’s review showed initially adopted fiscal 2022 budgets below their respective capped budgets for that year, with percentages under the cap ranging from less than 1% to less than 5%. Online budget records for Allendale County were not readily available.
Durham told The Nerve that he had researched the Policy Council’s sustainable-budget model but found nothing comparable at the county or municipal levels.
Big above-cap spending
The Nerve’s review of available county budgets statewide found that the following counties had the largest percentage differences between their initially adopted fiscal 2022 general-fund budgets and what those budgets would have been had they been capped at population growth plus inflation since fiscal 2018. The caps were based on annual millage-rate-limitation percentages provided to counties by the S.C. Revenue and Fiscal Affairs Office, which factored population growth and inflation for those years.
|FY22 adopted budget
|FY22 capped budget
The Nerve reached out to top administrators in the five counties for explanations about their respective budgets. In Laurens County, after providing an initial chart on county property-tax revenues, county Administrator Thomas Higgs referred The Nerve to online county audits and directed that any additional questions be submitted through a formal request under the S.C. Freedom of Information Act.
Higgs didn’t’ respond to a separate follow-up request for an explanation about why there was an additional total $8.9 million in approved spending above the annual population-and-inflation caps since fiscal 2018.
In a recent interview with The Nerve, Jasper County Administrator Andrew Fulghum said the additional total $7.6 million in approved spending above the caps for his county was needed primarily to bolster fire, ambulance and police services.
“It’s mainly to ramp up that capacity to serve those emergency services,” he said. “I’ve been here 19 years. There was a base need in these departments, and we’ve been finally able to move them to that.”
Fulghum said based on the most recently available figures from the state Revenue and Fiscal Affairs Office, Jasper County had the highest-percentage yearly population growth (5.2%) of any county, and was at or near the top of the population-rate-growth list over the previous several fiscal years.
He also said the additional $7.6 million in spending since fiscal 2018 was done without raising county millage rates, though noting that raising the rates up to the state-allowed caps would have been allowed.
Individual property taxes generally are determined by multiplying the millage rate by the property assessment. Fast-growing areas can raise significant tax revenues without increasing millage rates if they have big overall increases in assessment values that come with new construction.
Fulghum said lowering the operating millage rate in his county isn’t feasible despite a fast-growing population, contending, “Residential development does not pay for itself.”
‘Reviewed every dollar’
In a written response to The Nerve, Union County Supervisor Phillip Russell, who noted he has been in his elected position for a little more than seven months, gave several reasons for the additional total $2.9 million in spending above the caps in recent years, including, among other things:
- The county absorbed an emergency medical system that previously had been run by a local hospital system.
- The county used federal American Rescue Plan Act (ARPA) funds for a jail addition that was needed because of overpopulation, though he noted those dollars covered only 60% of the total cost.
- The county helped municipalities and unincorporated county areas in the removal of a large, old mill building and mill houses; and funded “utility infrastructure upgrades to improve quality of life.”
“We are a rural county with a lot of needs, requested by a lot of our citizens,” Russell said. “We are doing all we can to manage our funds to the best of our ability, to increase business, jobs, and housing.”
“I can’t speak for the past,” he added, “but I know that Council and I reviewed every dollar this year in our budget work sessions, and we had to make some hard decisions. There isn’t enough money for us to misrepresent, nor would our council allow such.”
Chester County Administrator Brian Hester gave an initial general response about county revenues, contending that “you can’t take that CPI + Growth factor and apply it to the bottom line of the budget and get an accurate assessment of what a budget should be.”
Hester didn’t respond to a follow-up question about what specifically constituted the additional total $4.3 million in spending above the caps in his county since fiscal 2018.
McCormick County Administrator Columbus Stephens didn’t respond to a written request from The Nerve seeking comment.
It wasn’t just smaller counties that had initially approved general-fund budgets since fiscal 2018 above what those budgets would have been if limited to population-and-inflation caps, The Nerve’s review found. Following are five larger counties that had similar spending patterns:
|FY22 adopted budget
|FY22 capped budget
In his interview with The Nerve, Durham, the Oconee County Council chairman, acknowledged that even if a county ordinance to cap annual spending passed this year, a less-conservative county council could later decide to rescind it. But he said he believes something needs to be done to rein in spending in his Upstate county.
“It’s just common sense,” he said. “You shouldn’t be growing faster than inflation and your population.”
Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or [email protected]. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.
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