In South Carolina, almost any successful politician sooner or later
must acknowledge the maxim that taxes are bad and tax increases are
worse.
This anti-tax propensity has forced local governments across the
Lowcountry and the state to find a means, other than taxes, to pay for the
services residents demand. It's a phenomenon playing out across the
country as the federal government and states cut back, leaving
cash-strapped local governments to struggle with rapid growth.
Because local governments have virtually no other way to raise money
without borrowing, they have only one place to turn - fees.
Fees, on everything from rickshaw permits to garbage collection, now
make up about half of the money collected by many local governments, more
than half in some cases, such as Charleston.
Bill Ahern, communications director for the Washington, D.C.-based Tax
Foundation, says increased fees are the path of least resistance when a
government needs money.
In many cases, he says, fees can be
increased by state or local governments without discussion or vote.
When a vote is required, he says, "One might speculate that from the
perspective of a politician who has pledged not to 'raise taxes,' he might
be willing to vote for a 'fee.' "
The nonprofit foundation hasn't surveyed fee increases, but Ahern says
he knows anecdotally that "fees have greatly expanded lately."
A way around tax increases
In Berkeley County fees account for about 40 percent of all the local
revenues. Taxes make up 55 percent.
Jim Rozier, Berkeley County's Supervisor, says fees make it possible
for local governments to augment taxes, especially the widely disliked
property tax, the bedrock of local government income. "If you had to rely
on property tax, you couldn't do it," Rozier says.
He sees fees as a fair and effective way for local governments to raise
necessary money for certain services, because only those who use that
service get charged, such as for entering some public parks. Fees have the
added advantage of staying under the public's radar.
"Fees are all over the place," Rozier says. But people rarely notice
them because they don't come in a big bill and don't affect everybody.
Tax increases often enrage people and prompt them to organized anti-tax
groups, as has happened across the state this year with property taxes.
But nobody organized a group called "Citizens Against Fees."
David Whetsell, president of StopTax.org, a group set up to promote
anti-property tax laws in the legislature, says fees are fair compared to
property taxes because only the user gets charged.
In Berkeley County, Catherine Welborn, executive director of Citizens
for Reasonable Taxes, says she was happily ignorant of how much money the
county raised through various sources until she became outraged over
recent property tax increases. She says she doubts that average residents
have any idea how big a role fees play in county finances.
Her husband, Paul Welborn, a board member of the anti-property taxation
organization, says he had never thought about fees. When told that fees
account for two out of every five dollars Berkeley County raises locally,
Welborn responded, "Wow! Wow!"
As with most residents, he hadn't noticed the amount of fees because
his attention was focused on what comes on his tax bill, Welborn says.
"We aren't smart enough to complain about fees." he said. "They slide
through. ... It looks like we're all paying coming and going."
Still, Welborn said he believes fees are fairer than taxes because they
charge only the people who use the service. Nevertheless, he says, "If
people recognized how much goes into fees, they'd be upset about
that."
In Charleston fees account for more than half of the local money the
city takes in - $60.6 million in fees compared to $54.7 million in taxes.
Charleston Mayor Joe Riley says that in a city with an economy that
revolves around tourism, it only makes good financial sense to charge fees
on services that tourists use, such as hotels.
Charleston finds fees so effective that it now charges some form of fee
on more than 100 services, from vending machines to tour carriages. The
biggest source of income from fees is business licenses, which brings in
$22 million.
Riley says fees are essential and help the city diversify its sources
of income so that not everything comes out of the pockets of
residents.
Fees also help fill the need as the state and federal governments cut
back on aid to cities, Riley says. "We have responsibilities that have to
be taken care of: The buck stops here."
In Berkeley County, Councilman Steve Davis says he will vote against a
$15 registration fee that the county wants to impose on all
businesses.
Davis warns that the modest fee could balloon like a money-sucking tax,
but he concedes that politics plays a part in the increased use of fees by
local governments. "People in political office can say we've had no tax
increase."
Fees vs. taxes
A comparison of locally raised taxes and fees, annually, in millions of
dollars:
| |
Taxes* |
Fees** |
| Cities/towns |
|
|
| Charleston |
$54.7 |
$60.6 |
| Moncks Corner |
$1.3 |
$1.9 |
| Mount Pleasant |
$16.6 |
$17.2 |
| North Charleston |
$41.5 |
$29.7 |
| Summerville |
$7.2 |
$6.6 |
| Walterboro |
$2.1 |
$1.5 |
| Counties |
|
|
| Berkeley |
$20.2 |
$15.2 |
| Charleston |
$96.8 |
$65.1 |
| Colleton |
$19.2 |
$2.2 |
| Dorchester |
$17 |
$7.2 |
* Figures are from latest available budgets.
** Fees include fees, licenses, permits, fines, rents and charges for
services.
Reach Doug Pardue at dpardue@postandcourier.com or
(864) 937-5558.