The South Carolina Governmental Landscape

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1 The information provided here is for informational and educational purposes and current as of the date of publication. The information is not a substitute for legal advice and does not necessarily reflect the opinion or policy position of the Municipal Association of South Carolina. Consult your attorney for advice concerning specific situations. The South Carolina Governmental Landscape Municipal Clerk Treasurers Institute March 13, 2019 Presented By: Jon B. Pierce, Ph.D. Fellow, The Riley Institute for Livable Communities South Carolina State Government LEGISLATIVE DOMINANCE State Government Structure As a result of partial restructuring in 1993 we have a hybrid state organizational structure Constitutional offices Legislative branch Judicial branch Cabinet departments Independent agencies 1

2 Major Changes and Impacts of Restructuring More than half of state government untouched (structurally) by restructuring Consolidated 75 agencies into 17 Created 3 new agencies; Revenue and Taxation, Public Safety, and Commerce A number of agencies became divisions of the governor s office Governor gained power to remove most of the boards and commission members Legislature retained control of local governments and the judicial branch Created a somewhat simpler state structure Created administrative law judges Enhanced the power of the governor through cabinet, appointment powers, executive budget Somewhat diminished legislative dominance Some regulatory reform particularly in the purchasing and human resources area A reduction in agency legislative lobbying efforts by cabinet departments and governor s divisions Information the legislature gets is much more controlled and constrained 2

3 Restructuring in the 2000s Department of Motor Vehicles (cabinet) Department of Transportation* (cabinet) Department of Employment and Workforce * (cabinet) Public Employee Benefit Authority State Fiscal Accountability Board Department of Administration (cabinet) Governor & Lt. Governor run as ticket Adjutant General is appointed by Governor Department on Aging (cabinet) Senate (Pres. of Senate presides not Lt. Governor) THE LEGISLATURE IS STILL DOMINANT! State Appropriated FTE Positions (Selected Years) Year Positions , , , , , ,572 State Population: 1997 = 3,859,696; 2018 = 5,021,410 At any time, approximately 8-10% of the positions are vacant. Source: Office of State Budget, October

4 Appropriations By Functional Group: General Funds Functional Group FY02-03 FY09-10 FY12-13 FY17-18 Legislative 0.52% 0.54% 0.72% 0.61% Judicial/Adm. Law Judges 0.74% 0.46% 0.75% 0.74% Executive and Administrative 4.36% 4.31% 6.31% 6.33% Higher Education 15.65% 12.56% 9.28% 8.08% Educational 36.66% 38.06% 35.63% 38.21% Health & Social Rehab 21.04% 24.53% 27.06% 26.77% Public Safety 2.01% 1.06% 1.11% 1.12% Correctional 6.82% 7.68% 7.71% 7.19% Conservation, Nat. Res. & ED 2.69% 1.92% 1.95% 2.66% Regulatory 0.95% 0.80% 1.32% 1.85% Debt Service 4.17% 3.33% 3.08% 2.41% Aid to Subdivisions 4.38% 4.74% 5.07% 3.38% Transportation 0.01% 0.00% 0.02% 0.66% Source: Office of State Budget, January 2018 Appropriations By Functional Group: All Funding Sources (In Billions) Functional Group FY02-03 FY09-10 FY11-12 FY17-18 Legislative 0.20% 0.16% 0.19% 0.19% Judicial/Adm. Law Judges 0.27% 0.28% 0.31% 0.31% Executive and Administrative 3.65% 3.26% 3.63% 3.75% Higher Education 17.93% 18.41% 19.94% 18.21% Educational 21.25% 18.44% 17.89% 19.98% Health & Social Rehab 38.00% 43.50% 46.22% 39.01% Public Safety 1.30% 0.64% 0.72% 0.70% Correctional 3.29% 2.76% 2.81% 2.57% Conservation, Nat. Res. & ED 2.36% 2.23% 1.63% 2.17% Regulatory 1.49% 1.59% 2.08% 1.78% Debt Service 1.51% 0.91% 0.94% 0.71% Aid to Subdivisions 1.58% 1.30% 1.27% 1.00% Transportation 7.19% 5.76% 6.09% 9.62% Source: Office of State Budget, January 2018 Total Budget $26,842,146,138 General Funds $7,947,088,831 (% of Total = 29.61%) South Carolina Local Governments 4

5 Types of Local Governments Counties every South Carolinian lives in a county Municipalities about 35% of South Carolinians live in a municipality School Districts every South Carolinian lives in a school district Special Purpose Districts a smaller number live in a special purpose district Pre Home Rule Local Government Local governments in SC were an ad hoc collection of entities whose structure and power was largely defined by the local legislative delegation Municipalities had a much greater grant of authority than counties did and thus the move to home rule had much more of an impact on counties than on municipalities The role of counties was very limited; county purpose doctrine. This limited role plus the restrictive annexation laws in South Carolina led to the proliferation of special purpose districts in the state. The legislative delegation, in particular the resident senator, ruled supreme. The county budget was passed by the legislature as local legislation and was called the county supply bill. Local affairs occupied much of a legislator s time, and local laws made of the vast majority of laws passed 5

6 Government by legislative delegations served the needs of a predominately rural state but by the 1960s the nature of the state was changing. The federal courts in such cases as Reynolds v. Sims (1964) established the one-man, one-vote concept for electoral representation at the state level. This resulted in many counties losing their resident senator. This spurred the movement to revise county government. Home-Rule In 1966 the General Assembly created a Constitution Revision Committee to recommend changes to the Constitution. The local changes recommended by the Constitutional Revision Committee were put before the people in 1972 and were ratified in 1973 as Article VIII of the State Constitution. After intense bargaining and compromise, implementing legislation was enacted in 1975 ( Home Rule Law) The Act provides for 3 forms of government for municipalities and 5 forms for counties (one of which, the commission form was ruled unconstitutional) The Act designated the general powers of municipal and county governments. Municipalities and counties derive their powers and duties today from our state s constitution and statutes After intense bargaining and compromise, implementing legislation was enacted in 1975 ( Home Rule Law) The Act provides for 3 forms of government for municipalities and 5 forms for counties (one of which, the commission form was ruled unconstitutional) The Act designated the general and specific powers of municipal and county governments. Municipalities and counties derive their powers and duties today from our state s constitution and statutes; they do not have inherent powers. 6

7 Powers and Authority of Municipalities and Counties Counties and municipalities are creatures of the State. Therefore their powers and authorities are found in the SC Constitution and, more specifically, the SC Code of Laws. There are separate titles in the Code of Laws for municipalities (Title 5) and counties (Title 4) that specify specific powers. General Police Powers Municipalities and counties have authority to enact regulations, resolutions, and ordinances (not inconsistent with the Constitution and general law of the State) as appears necessary and proper for the security and general welfare and convenience of the jurisdiction or for preserving health, peace, order, and good government in them. Article VIII, Section 17 The provisions of this Constitution and all laws concerning local government shall be liberally construed in their favor. Powers, duties, and responsibilities granted local government subdivisions by this Constitution and by law shall include those fairly implied and not prohibited by this Constitution. 7

8 Municipalities and Counties in SC 270 municipalities* Great variation in services delivered Most are very small (210 less than 5,000 population) 46 counties Some variation in services delivered Population varies greatly from the smallest ( McCormick 9,958) to the largest (Greenville 379,612) Forms of Government Distinguishing feature of forms is where legislative and executive authority resides. There are provisions in the SC Code for changing the forms of government. Municipal forms of government Council 81 Mayor/Council 157 Council/Manager 32 County forms of government Council 6 Council/Supervisor 4 Council/Administrator 34 Council/Manager 2 Cherokee York Pickens Spartanburg Greenville Oconee Lancaster Union Chester Anderson Laurens Chesterfield Marlboro Abbeville Newberry Fairfield Kershaw Darlington Dillon Greenwood Lee Mccormick Saluda Richland Lexington Sumter Florence Marion Horry Edgefield Calhoun Clarendon Williamsburg Aiken Orangeburg Georgetown Barnwell Bamberg Berkeley Dorchester Allendale Forms ofgovernment Council Hampton Colleton Charleston Administrator Supervisor Manager Jasper Beaufort 8

9 Representation Single member districts At-Large Mixed Partisan or non-partisan (counties required to be partisan) Individual council member perspectives Trustee Delegate Politico Funding Counties and Municipalities The Legal Context - Funding S.C. local governments are creatures of the State Act 139 of 1989 counties were given a clear grant of general police powers; provide broad range of services Williams v. Town of Hilton Head Island and Brown v. Horry County the S.C. Supreme Court ruled that municipalities and counties have significant latitude to raise the revenue necessary to fund these services BUT 9

10 The General Assembly has placed new limitations on the use of the property tax to pay for new or expanded services Beginning January 1, 2007, limited the millage rate increase to the percentage increase in the CPI over the previous year plus the percentage increase in the population of the entity over the previous year. (SC Code Sec ) H.4450 Placed a constitutional amendment on the November 2006 ballot. The amendment passed and authorizes the General Assembly to define fair market value of real property. Further, a property s value may not increase by more than 15% every five years, unless the real property is transferred or substantial improvements are made. Fiscal Authority Act of 1997 (Act No. 138) - A local governing body may not impose a new tax after December 31, 1996, unless specifically authorized by the General Assembly Defined the sources of revenue available to counties and municipalities Fees and charges must be linked to a specific service and accounted for separately generate more than 5 of prior fiscal year budget Local governments in S.C. have a good deal of home rule re: structure, services, and personnel BUT Do not have full fiscal home rule Traditional/Home Rule Revenue Sources Property taxes Business license taxes Franchise fees User fees and charges 10

11 Alternative Revenue Sources Local option sales tax Business license taxes and registration fees Franchise fees Local accommodations and hospitality taxes Sales and use taxes Development fees Tax districts User fees State Mandates to Local Governments 3 types of mandates Active require local action Restrictive prohibit certain local actions Traditional do not exist in law but in practice Fiscal Impact Statement Law, 1983 required author of bills affecting local government to attach cost estimates (this proved inadequate) Local Government Fiscal Impact Statement Team (FIST) created in 1991 to solicit local government input on the cost of proposed legislation State Mandates to Local Governments (cont) Unfunded Mandates Act of 1993 Requires 2/3s vote of members voting in each house General Assembly has to determine that the law fulfills a state interest In general, provides that General Assembly must fund most mandates to local governments Contains 9 different exceptions or cases Provisions do not apply to mandates passed prior to enactment of the Act Unfunded Mandates Act was amended in 1997 to include budget provisos 11

12 School Districts 81 school districts (also 4 special districts) 763,588 students for the school year Vary greatly in terms of student population; Greenville 76,285 to Barnwell Enjoy different levels of fiscal autonomy Autonomous 13 Limited authority 37 No authority 35 *45 day average daily membership (SC Department of Education) Special Purpose Districts Number depends on the source (200-over 500) Created by the General Assembly prior to Home Rule to provide one or a very few services Were created to respond to demands for services that the counties could not constitutionally nor statutorily provide Impact of restrictive annexation laws and county purpose doctrine on proliferation Most Common SPD Service Areas Fire Recreation Water and sewer Watershed and drainage 12

13 Councils of Governments 10 regional councils of governments in SC Geographic regions created by General Assembly Created by voluntary cooperation of two or more counties Primary rationale for creation was to foster intergovernmental relations and to address issues that were beyond the capacity of individual jurisdictions to address Powers and duties found in Sec Composition, type and level of services, and funding patterns vary from region to region 13