Posted on Sun, Jan. 22, 2006
EDITORIAL

Easing the Sting
Liberalized impact fees would make tax swap less painful for Horry


There was only one bright spot for Horry County in Gov. Mark Sanford's endorsement last week of the legislative effort to eliminate residential property taxes by raising the state sales tax 2 cents. In his State of the State speech, Sanford acknowledged that rapid population growth drives property taxes ever higher. He implored legislators to empower local governments to require new residents to pay a greater share of the infrastructure and public services costs that stem from their migration here. His preferred means of doing this would be liberalized impact fees.

Make no mistake: Even with a tax-swap plan that allowed local governments much broader latitude to impose impact fees on developers, Horry County still would suffer. Raising the sales tax while eliminating the residential property tax would:

Drive up taxes on commercial and industrial properties.

Cripple Horry County Schools' ability to finance academic improvement locally.

Raise the cost of Grand Strand vacations.

Make it virtually impossible for local governments to enact local-option sales taxes.

Siphon even more sales tax money from Horry County to school districts elsewhere in the state.

Still, Sanford's endorsement of impact fees will come as great news to readers who believe that developers should have to provide new schools and other infrastructure, as well as new public-safety personnel, to accommodate new residents. These costs would be added to the construction costs of hew houses.

Right now, the state, with the enthusiastic support of the development lobby, restricts the purposes for which counties and municipalities can levy impact fees. Current law bars local governments from imposing impact fees to pay for schools, police and fire salaries and the other high-dollar expenses that must be made to keep pace with growth. The only other comprehensive resource that local governments have to defray growth costs is the property tax.

Does Sanford have the clout to impel legislators to broaden local governments' power to initiate local impact fees? That's not yet clear.

Certainly, the state's powerful development lobby would object. Only a few years back, that lobby managed to shrink the scope of the impact fee law to the point where it's now virtually useless to fast-growing counties such as Horry - increasing the upward pressure on the property tax.

The ideal outcome for this debate would be no change in the law at all. But if the governor and S.C. legislators lack the political will to resist raising sales taxes to buy down the residential property tax, they should at least summon the will to override developers on impact fees.





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