Sumter's Murrell Smith proposes change to Local Government Funding formula

By Kayla Robins
kayla@theitem.com
Posted 1/13/19

State lawmakers, spearheaded by a Sumter representative who has recently risen the ranks to lead the powerful budget-writing committee, may have finally come up with a new, better way to disperse funding to local governments.

Rep. Murrell Smith, …

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Sumter's Murrell Smith proposes change to Local Government Funding formula

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State lawmakers, spearheaded by a Sumter representative who has recently risen the ranks to lead the powerful budget-writing committee, may have finally come up with a new, better way to disperse funding to local governments.

Rep. Murrell Smith, R-Sumter, introduced H. 3137, a bill to make changes to the Local Government Fund, a formula that disperses seven locally collected taxes back to municipalities through the state treasurer.

According to the Municipal Association of South Carolina, the state calculates the amount of revenue local governments receive based on 4.5 percent of the previous year's state general fund base revenue. The problem started when the recession hit in 2008 when the general fund decreased substantially, creating a lack available revenue the next year.

The legislature, in the height of the recession, kept some of the money from the LGF in the general fund to be able to pay for state expenditures.

"By the time you get to budgeting, that number is a year and a half old," said Melissa Carter, research and legislative liaison for the Municipal Association of South Carolina. "The priority is to change the calculation so when cities [and counties] go to do their budgets, they know they can depend on the amount. To have stability and dependability is what we're after."

Carter said both the MASC and the South Carolina Association of Counties have met with legislators and have endorsed the new bill, which was written and introduced by Smith, the new chairman of the Ways and Means Committee, which gets the first crack at writing the state budget.

"It's been a long-running debate between the legislature and counties and cities, so finally everyone got together, and we've reached a resolution," Smith said Friday. "And it's consistency moving forward.

"Local governments now will know what they can count on when they're doing their process. They're currently waiting to see what they receive from the Local Government Fund because it can change right up until we adopt our budget."

Under the proposed bill, a funding rate would be frozen this year and used as a base for future years. If the state's general fund is projected to grow, the allotment for the Local Government Revenue Sharing Fund would increase by that same percentage up to 5 percent.

The initial group of representatives on the bill was only nine deep on Friday, but they include, other than Smith, all four leaders - Speaker Jay Lucas, R-Hartsville, Speaker Pro Tempore Tommy Pope, R-York, Majority Leader Gary Simrill, R-Rock Hill, and Minority Leader Todd Rutherford, D-Columbia. That signals there is a "very good" chance it will easily pass the House, Smith said, and "from preliminary talks at the Senate they are enthused."

"It's long overdue, and it will resolve the issue that's been lingering for a number of years between the Association of Counties and local governments and the General Assembly and now work forward with corrective issues on improving the lives of the state and each county," Smith said.

According to MASC, the City of Sumter was supposed to get $1.4 million but only received $915,396.

In 2016, the most recent year where complete funding data is available through the South Carolina Association of Counties, Sumter County saw a $1.6 million shortfall.

Across the state, the LGF was funded between 97 and 100 percent through Fiscal Year 2008. In FY 2010, municipalities and counties throughout South Carolina were only funded 80 percent, not seeing a total of $57.4 million.

Losing that funding is only half the issue.

"When we start the budgeting process, we have to wait to see what we're going to get from the state level. That doesn't leave us very much time," said Jim McCain, Sumter County Council chairman.

McCain he and the council supports the bill Rep. Smith introduced.

Gary Mixon, Sumter County administrator, said it is hard to put an exact label on what has been missed with the withheld funding, but that adjustments have been made for the past 10 years.

"There's a need for road improvements on county roads, and we haven't had funding to do that," Mixon said.

Sumter County's budget is around $50 million, so not getting $1.6 million is "a significant amount."