January - Municipal Association of South Carolina

Legislative recap of the 116th session
of the SC General Assembly
The General Assembly adjourned on June 1 to end its 116th Session. The following is a brief summary of the
key legislative issues of interest to business license officials and other municipal officials.
Taxicabs
Legislation regarding certification of taxicabs was signed
into law on April 5, 2006, and amended Section 58-23-
1240. The law calls for a sticker or metal plate to be affixed
to the rear of a taxi. The dimensions of the plate or sticker
must be approved by the municipality where the taxi principally
operates. The law eliminates
the requirement to change
the color of the sticker annually. A
taxi owner who qualifies as a self
insurer must issue to the taxi operator
a certificate of insurance.
The certificate must remain in the
taxi while it is in operation.
Property Tax Reform
Property tax reform was a hot issue last session. After debate
lasting the length of the session followed by a constitutional
amendment vote in November, the final result was
a sales tax/property tax swap and a limit on property value
increases during reassessment years.
The tax swap involves exchanging a reduction in the property
tax for school operations for an increase in the sales
tax. Any surplus revenues could replace property taxes
on owner- occupied homes for county operations. While
municipal governments are not directly affected by the
sales tax/property tax revenue swap, the increase in sales
tax will increase operation costs, and the millage rate limits
will create additional pressures for finding other revenue
sources to fund the municipal services required by the
local citizens. Local governments and school districts are
not allowed to increase their millage rates more than the
previous year’s Consumer Price Increase plus the percentage
increase in population.
A new property tax reassessment method limits property
value increases during the years of reassessment to 15
percent unless the property has been sold, transferred
or had major improvements. If any of these events take
place, the property values increase to the appraised value.
Property tax reform was a hot issue
last session ... the final result was a
sales tax/property tax swap and a limit
on property value increases during
reassessment years.
New construction must now be placed on the tax rolls
upon receipt of a certificate of occupancy. Previously, new
construction was not placed on the tax rolls until January
1 each year. In some cases, properties are occupied and
receive the benefit of local government services for almost
two years before the property tax is due.
Counties may impose an additional
sales tax if approved
by a county-wide referendum.
The additional revenues must
replace property taxes on other
classes of properties. During the
property tax debate this year,
legislators spent considerable
time on the sales tax exemptions
and caps, such as the $300 tax cap on automobile
sales. A Sales Tax Exemptions Review Committee will look
at all of the sales tax exemptions and provide a report to
the General Assembly in 2007.
Local Accommodations and Hospitality Taxes
Legislation passed allowing municipalities and counties to
use 20 percent of the local accommodations and hospitality
tax revenues for operating costs of the tourism-related
facilities. Approved uses include tourism-related buildings;
tourism-related cultural, recreational, or historic facilities;
beach access and re-nourishment, tourism-related lands
and water access; highways, roads, streets and bridges
providing access to tourism-related destinations; advertisements
and promotions related to tourism development; or
water and sewer infrastructure to serve tourism-related demand.
Previously, only municipalities in counties collecting
more than $900,000 in state accommodations tax funds
were allowed to use any of the local accommodations and
local hospitality taxes for operating and maintaining these
tourism facilities and activities.
Legislative continued on page 5
3