If you live in South Carolina, you’ve probably heard of the Penny Transportation Tax passed in the recent election by voters of Richland County. “Richland County?” you might scoff if you live elsewhere, “What do I care about Richland County?” Now, wait just a minute. Not only does this tax affect anyone living in or visiting Richland County (supporters say nearly half of the revenue generated will come from non-residents), but it has implications for every other county and region as municipal and state governments are facing increasingly difficult decisions about how to improve infrastructure in the current penny-pinching economic climate. Tax referendums have been popping up all over the nation, to varying degrees of results. It’s certainly noteworthy that Richland County, SC, voted to support this 1% sales tax increase only four months after nine regions of Georgia, including the Atlanta region — one of the most traffic- and transportation-troubled regions in the country — shot down just such a tax.
In this post, we’re going to explain the ins and outs of this new Penny Tax, giving you a concise overview of how it works, with easy-click resources to more information, and, perhaps more importantly, why even non-Richlandians should know about it.
What is the Penny Transportation Tax?
All the official info can be found here, but we know you’re busy so we’re going to break it down for you. As of May 1, 2013, the Penny Transportation Tax will add one percent to sales tax, making a total of 8 cents on the dollar, for most purchases within Richland County. Some exceptions to the tax include food-stamp purchases, prescription drugs, and school books. The S.C. Board of Economic Advisors has estimated that this will result in a $253 increase in what the average family of three in Richland County pays per year. The tax will end either in 22 years or after it has generated $1.07 billion, whichever comes first and will be monitored by a citizen-only Oversight Committee.
The target revenue of $1.07 billion will be used accordingly:
- $656 million (63%) to widen and improve roads
- $301 million (29%) to expand bus service
- $81 million (8%) to build sidewalks, bike lanes and “greenways” (walking trails through natural areas)
So why should I care?
There are some big lessons we can take away from this that everyone, from Caesar’s Head to Hilton Head, ought to consider:
1. This Penny is not the first, nor is it the last. Adding one-percent to sales or hospitality taxes to fund infrastructure improvement projects is no new concept, nor is it a widely hated one. Although an effort for this same tax failed in Richland County two years ago, it passed by about a 6,000 vote majority (or 52%) in 2012. Supporters for the tax were able to raise a campaign budget of about $200,000, while opponents’ budget was estimated at a meager $1,000.
Richland County looked at similar penny sales taxes in eight counties across the state, like Horry County, which voted in 2006 to support a 7-year One-Cent Capital Projects Sales Tax for roads, or Newberry and York Counties, which voted in 2011 to renew their 1% Capital Projects Tax after seeing substantial infrastructure improvements during the first installment, and Charleston. After the success of the Penny in Richland County, Lexington County officials are planning to introduce a similar Penny measure, but like most other Penny taxes, with a projected 8-year limit. With the exception of a similar ½% tax in Charleston, the Richland County Transportation Penny Tax is unique for its long life of up to 22 years.
So it’s important to stay tuned to changes in the areas around you so you won’t be surprised when your council starts stirring over similar policies.
2. Local matters. In South Carolina, a one-cent sales tax for transportation could never pass on the state-wide level (at least not at the moment). Every county and even city has different needs. Probably the main reason the Richland County tax and another transportation tax in Charleston have such lengthy terms is because of the bus systems in both metropolitan areas: smaller cities and rural counties don’t have to find long-term funding and maintenance solutions to transit. And on the local level, cooperation matters just as much. The S.C. Attorney General ruled that the City of Columbia couldn’t impose a hospitality tax to pay for transportation costs, so the City had to work with the County to develop a new solution. In the deal, the City promised to remove the 2% franchise fee it charged city residents on their utility bills — the one that had been previously used to fund the bus system — and smaller municipalities within the County will contribute to projects in their respective areas with their own funds. Thus the Transportation Penny was born.
Local action is also important because the higher level the policy, the more hoops it has to jump through to get passed. The S.C. State Legislature hasn’t raised the gasoline tax since 1987, and isn’t likely to in the near future, so local governments have to take infrastructure issues into their own hands. We noted above that in July 2012, Atlanta and eight other regions in Georgia voted against imposing a one cent sales tax for roads and transportation. While each region had compiled its own list of special local projects to direct the funds toward — and there were a variety of factors at play in voters’ decisions last summer — one likely source of disapproval was that the tax policy came from the top down. The more levels of bureaucracy, the easier it can be to lose sight of what’s happening with the money, and the harder it is to garner voter approval, which will lead us to our third and final point below.
The things that affect your daily life the most, like infrastructure and transportation, are often decided on and enforced at the local level, so it’s important for you to be aware of what your city, county, and state governments are doing and how they’re working together.
3. And the underlying issue is… transparency and accountability. These are the two age-old prerogatives of any democratic system and of course they are just as important at the local level as at the state or national level, yet often are the most difficult to achieve consistently and efficiently. The first attempt at the Penny Tax failed two years previously because the County hadn’t provided enough information about what projects the revenue would fund and hadn’t guaranteed oversight and transparency. Mayor Hardy King of Irmo has claimed that a similar proposal for a Penn y Tax will gain more support among Lexington citizens than the Transportation Penny did in Richland County, because Lexington County officials would be more accessible and accountable.
Richland County, however, has made substantial efforts to uphold transparency: in its Transportation Penny Fact Sheet, it promises to provide a complete list of projects online with update-to-date information on expenditures and progress, and to establish a citizen-only Oversight Committee. This committee of 15 Richland County citizens is currently being formed and due to be finalized by the end of January 2013. You can also get directly in touch with the county now at (803) 576-2050 or firstname.lastname@example.org. Nevertheless, even with these commitments to transparency, one of the main arguments against the tax in The State’s article on pros and cons running up to the election was that “there’s too much uncertainty on how the money from the tax would be used.”
Ultimately, the issue over the Penny Tax hinged primarily on whether people trusted the government through transparency and accountability, which both depend on easy-access information and a simple platform for communication between citizens and community leaders. Luckily, VOTERHEADS IS COMING SOON to help.
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