28 Feb Council is Unanimous – Call Your Legislator!
First I want to thank the many who responded to my colleagues shout out on Facebook and through letters explaining how a proposal to standardize business license classifications, employ uniform application forms and provide for on line payment makes such good sense that the City of Beaufort has already taken these actions . . . with the support of the Municipal Association, on whose board I sit.
Where the proposed business license reform measure goes wrong when it creates a new collection apparatus, makes our local taxes vulnerable to annual raids by special interests and interferes with local government that is working for our citizens.
I understand the measure is slowing down, as news reporters and editors and citizens are asking if we more Columbia government in our hometowns or should the government closest to and most trusted by the people be left to serve the people without outside interferences.
The following outlines the city’s position in opposition to such “reform.”
A proposal in the state legislature could cost Beaufort an estimated $1.1 million in annual business license revenue if passed.
Beaufort city leaders shared their concern and opposition to House Bills 3650 and 3651 and asked area residents to contact the legislative delegation. Beaufort City Council members Nan Sutton and Stephen Murray, both small business owners in the city, shared a video via Facebook that listed reasons to oppose the bills.
Beaufort City Manager Bill Prokop stressed, though, that Beaufort favors standardization of business license requirements, one of the elements in both bills. Further, the city already has taken steps to standardize the business license process and to make it more business-friendly, he said.
· Last fall, the city’s finance department rolled out an online payment system accessible to all business owners, allowing them to renew business licenses online and pay their bills.
· Several years ago, the city accepted and began using the standards business license application developed by the Municipal Association of South Carolina.
· Adopted the North American Industry Classification System for classifying business categories for licensing.
“We have worked hard, and we have worked for quite a while, to standardize our business license program based on recommendations from the Municipal Association of South Carolina,” Prokop said.
“We have put forth a lot of effort to put business license renewals, hospitality and accommodations tax payments online, to make it easier for businesses to do business with the city,” he said. “While we have been doing that, it seems the state has been looking for ways to restrict municipalities in terms of our revenue for daily operations.”
House Bill 3650 would change the method and collection of business license fees. The bill would prohibit municipalities from charging a higher rate to businesses physically located outside the city limits. It also would exempt 25 percent of a business’s income that is collected outside of the municipality where the company maintains its principle business. The bill, however, doesn’t define “principal business,” Prokop noted.
In Beaufort, those changes would affect companies such as big box retailers and car dealerships. A big box retailer headquartered outside of Beaufort – or outside South Carolina — would pay a business license tax on only 75 percent of its Beaufort income compared to locally-owned stores which would have to pay on 100 percent of their local income.
Kathy Todd, finance director for the City of Beaufort, said the proposed House bills would create the following estimated annual losses in revenue for Beaufort:
- $377,179 to $500,000 from the reduction of business license tax collected from business activity within the city from businesses whose primary location is located outside city limits
· $110,000 from the reduction of business license tax collected from business income where the business maintains a principal place of operation outside the city limits
· $251,245 from the reduction in insurance premium tax
· And $111,576 to $150,000 from other provisions such as the $100 filing fee rebated the following year, the effect on accuracy of reporting telecommunications tax, brokers tax, etc.)
“These proposed changes to the business license law, coupled with the state’s restrictions on local governments controlling their own property tax structure, handcuff us and other municipalities,” Prokop said.
“While we are limited in our ability to create revenue, we are seeing increased needs for expenditures such as police and fire service, maintaining our parks and open spaces, and creating new opportunities for economic development.”
“A loss of this magnitude would leave City officials no choice but to raise property taxes, business license rates or to create other user fees such as a public safety fee or road maintenance fee; or to cut public safety and public works personnel or a combination of these measures,” Todd said.
“Assertions by our legislators that revenues would increase by their amendments aren’t supported by any credible analysis,” she said. “The City is confident that the current level of services would not be able to be maintained without an impact on our residents or those services if these changes to the business license process are adopted.”