ACT 388 penalizing growing school districts, municipalities

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By David Meade

Anderson School District One is among a number of growing school districts across the state, that are being penalized in funding as the result of ACT388, a law enacting a one cent statewide sales tax to replace residential housing property tax in the state. District One Superintendent David Havird said this week that Anderson District One has lost several million dollars in funding since the state enacted ACT 388 in 2007 to provide property tax relief.

Havird said growing school districts throughout the state are being penalized by the formula state legislators came up with for property tax relief which was supposed to be made up with the one cent sales tax.

While the concept was good when the state economy was seeing growth and sales were booming, the economic downturn experienced a year or two later resulted in less revenue for the state, and in turn less funding for growing school districts.

The ACT388 formula is based on the consumer price index and state population growth. The amount now being generated does not match what would have been taken in through property taxes on housing in growing districts like District One.

District One is the fastest growing school district in Anderson County and one of the fastest in the state.

Fast growing districts with new housing going up like Anderson District One, do not receive the funding needed to keep up with the growth, according to Havird.

Stagnate or declining growth districts however, receive more funding per pupil, he said.

District One is expected to add an additional 150 students for the 2016-17 school year and student growth for the district has been “almost identical for the last three to four years.”

Other growing school districts also feeling the effect include Fort Mill, Dorchester and Lexington One.

The formula used by the state under ACT388 determines the allowed increase in millage tax rate by a combination of consumer price index (CPI) and population increase up to the cap of 2.4 percent.

Currently CPI in the District is at .12 percent and population growth is at 1.53 percent. Combining the two for 2016-17 allows a millage rate increase of 1.65 percent.

The state average for operation mills is 180. District One is currently at 142.1 mills and with the increase will be at 144.5 mills. The millage rate increase will generate an additional $235,846.

During a recent budget worksession, Havird said the increase doesn’t even cover the expense of adding new teachers needed to meet growth in the district.

The burden of the millage increase falls on business owners, commercial and industrial properties and on motor vehicles.

Even with the 2.4 percent increase in millage, taxpayers in School District One will see an overall decrease of 4.5 mills.

The local option penny sales tax approved by voters last year has allowed the district to make many improvements and, as school board members requested, extra funding designated for debt service reduction will amount to 6.9 mills. When combined with the 2.4 mill increase, the result is a net decrease of 4.5 mills for tax payers in District One.

For an owner occupied home valued at $100,000, the yearly tax savings will amount to $27.60. For a business property valued at $100,000, the savings will amount to $27. Owners of a vehicle valued at $20,000 will see a savings of $5.40.

The district has received $1.325 million to reduce debt since the one cent sales tax was implemented in 2015.

In comparison, Havird estimates that District One is losing approximately $3,857,082 per year due to ACT388, and over the last several years, the loss has amounted to approximately $13 million the district would have received.

“It is impacting us,” Havird said. “The Palmetto, Wren and Powdersvillle areas are growing. There is tremendous subdivision and apartment growth in the Powdersville area.”

“It is a great community, with a very good school district that attracts people. The upstate is a great place to live, along the I-85 corridor.”

Municipalities and Counties are also feeling the effects of ACT388.

Anderson County Councilman Francis Crowder has recently brought up the effects of decisions made by the General Assembly when they passed Act 388.

Reduced vehicle taxes and property taxes have resulted in a combination of actions that Crowder said had cost Anderson County approximately $8 million a year in reduced aid to subdivisions funding from the state.

During recent budget sessions, Williamston, Pelzer and West Pelzer officials have also mentioned that ACT388 limits their ability to increase millage and keep up with rising expenses.