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Capital plan: Council considers 1-cent sales tax to replace impact fees

By Jackie R. Broach
Coastal Observer

A new proposal under consideration by Georgetown County Council could put as much as an extra $48.3 million in the budget for its capital improvement plan.

That’s money that could be used to accelerate the time line for projects in the plan, add new projects, pay off debt or restore funds to projects that were reduced in scope, such as a new Waccamaw Library to be built in Litchfield. Dredging of Winyah Bay or at Murrells Inlet are also possibilities for use the funds.

During a regular council review of the capital improvement plan, County Administrator Sel Hemingway asked them to mull over the possibility of eliminating the county’s impact fee and enacting a penny sales tax that would be used for capital projects. The tax would not apply to items the state doesn’t charge sales tax for, including food and prescription medicine.

Hemingway admitted the idea could be “somewhat controversial,” but the penny sales tax is something that has worked well in other counties in the state, he said, and taxpayers often end up liking it enough they decide to renew the sales tax for another project once the initial approved period has expired.

If council approves the sales tax, it will have to get the public’s approval through a referendum at the November election.

Council will take a couple of weeks to gather input on the proposal from constituents and decide if it’s something they’re willing to support. The item is expected to appear as a resolution on the agenda for council’s Feb. 28 meeting.

If council approves the resolution, a six-member commission would be formed to come up with a specific list of projects the sales tax would fund and formulate the wording of the question that would be posed to voters in a referendum. Three members of the commission would be council-appointed and three others would come from

municipalities within the county. Most likely Pawleys Island, Georgetown and Andrews would each appoint one member.

The tax can only be collected for a limited amount of time, not to exceed eight years and must be set for an even number of years.

To illustrate the possibilities of the sales tax, Hemingway showed council a modified version of the capital improvement plan in which impact fee revenue stops coming in 2014, bond issuances are reduced and those funds are replaced with revenue from a one-cent sales tax that would be enacted for a period of four years.

If all projects in the plan were carried out as dictated by the current version, which council updated this week, the county would have an extra $20.3 million to put to use with a four-year sales tax. That sum would grow to $34.3 million with a six-year tax and $48.3 million with an eight-year tax.

Council Member Bob Anderson liked the eight-year plan and said that would be his recommendation. “You’d might as well when you put this kind of effort into it,” he said.

But it is undecided what time limit council will pursue for the tax if it decides to move forward. Hemingway advised council to see what kind of public reception the idea for a tax receives before worrying about a time line or specifics about how the money would be used.

However, Hemingway did offer some general possibilities that some are sure to find enticing. For Waccamaw Neck residents, the most notable was perhaps restoring plans for a new Waccamaw Library to the county’s original specifications.

As a result of the economy, scarcity of grant funding and fundraising difficulties, the county’s plans to build a $6 million library were scaled back when the capital plan was updated in December 2010.

The county now plans to build a $3.5 million library. Of that total, $315,000 needs to come from grants and fundraising. The original total included the purchase of land, but that was obtained through a deal with the Georgetown County School District which will bring down the cost.

Restoring the plans would give the county a 27,000-square-foot library (the minimum recommended size for the population) instead of the 17,000-square-foot one called for now. That would put a large auditorium and public meeting rooms back in the plans, a heritage center and adequate space for programs for children and young adults.

“The results would be enduring and so important for the community,” said Dwight McInvaill, library director. “This would allow us to provide the very best in educational resources for the children of our community and for the future.

“I think that library supporters throughout the county would be ecstatic endorsers of the sales tax to build these facilities that are so sorely needed.

The new library is slated to open in 2015.

Construction of a new Georgetown library could also be moved up the list and back into the current phase of the capital improvement plan, which goes through 2018. It was pushed out of the first phase as a result of decreased revenue. The same goes for a Sampit Library.

Another possibility is to move up the entire road improvement list, completing those projects and eliminating the need for residents who petition for road improvements to wait sometimes eight to 10 years for their project to reach the top of the list.

Paying for part of dredging projects, including the one that would allow the Georgetown port to bring in more business, contributing significantly to the county’s economic development, could become a possibility for the funds under a bill introduced by the state legislature.

But those ideas are only possible if the county’s voters are receptive to a new sales tax in lieu of the county’s fee on new development.

The last time a local option sales tax was proposed, in 2004, it was rejected by a vote of 11,257 to 10,349 in a referendum. The tax was promised to contribute to property tax relief. County voters had rejected the tax once before.

The recession and uncertainty about the economy might hurt the chances of getting a local option sales tax passed this year, Hemingway said. Additionally sales taxes are viewed as taking a proportionally greater amount from low income residents, which could also hurt the tax’s chances.

The regressive nature of sales taxes one a main reason voters gave in 2004 for opposing the proposal.

But Hemingway points out that a sales tax would have the advantage of getting non-residents of the county to contribute to projects.

About 25 percent of funding through a capital projects sales tax would come from visitors, he said.

“We just wanted to make sure you had an opportunity to consider it,” Hemingway told council. “I think it’s worth consideration.

Outlook is good for capital plan

The bottom line in an annual review of the county’s capital improvement plan is an increase in funds of $2.3 million, despite some significant losses.

Capital outlay costs increased by $515,000 and revenues included in the plan decreased by more than $1.2 million. A huge part of that was the removal of place holders for grant funds that haven’t been materializing as originally anticipated, according to Hemingway.

However the county also saw a $2.9 million net decrease in total debt service costs and a decrease of $1.1 million in operations and maintenance costs. Some projects are now being funded form other sources.

The result is that the county will be able to complete a few projects it didn’t plan on last year, including trails and camping areas at recreation facilities.

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