State House

In This Section

2007 Technical Bulletins

Oct. 4, 2007
Maintenance and Funding of South Carolina's Road System

Aug. 30, 2007
Indigent Defense Act — Act 108 of 2007

Aug. 8, 2007
2007 Legislative Changes Related to Land Use and Planning

Aug. 7, 2007
(Revised Sept. 17)
Derelict Mobile Home Legislation — Act 45 of 2007

June 14, 2007
Passing Workers' Compensation Reform

June 8, 2007
Millage Rate Limitation — S.C. Code §6-1-320


Oct. 4, 2007
Maintenance and Funding of South Carolina's Road System

Proposal

The S.C. Department of Transportation (SCDOT) is considering a proposal to transfer some of the roads under the state system to local governments. SCDOT commissioners contend that these roads are in poor condition, and funds are not available to continually maintain them.

Further, they believe that many of these roads have no reason for being under the state system in the first place. The proposed transfer would include some secondary roads, dirt roads, parking lots, subdivision roads and driveways. The source of funding would most likely be an increase in the gasoline user fee. However, the General Assembly has been so reluctant to increase this fee that it has remained the same for the last 20 years.

Approximately 62 percent of South Carolina's road miles are state-owned and 38 percent are locally-owned. Nationally, 19 percent of all public roads are state-owned, with the remaining 81 percent owned by county and municipal governments. It is estimated that the proposed transfer would reduce the state's inventory by 10 percent.

South Carolina's Roads System1

State Road System

South Carolina has the fourth-largest state road system in the nation and maintains about three times the number of miles as other states. The state system includes:

  • 41,391 road miles
  • 8,331 state-owned bridges
  • 830 miles of interstate
  • 34 Rest Areas and Welcome Centers
  • 23 million linear feet of curb and gutter
  • 1.25 million driveway entrances
  • Over 530,000 traffic signs
  • 75,000 shoulder miles of mowing
  • Over 20 million linear feet of sidewalks
  • Nearly 1,300 miles of guardrail

1 Much of the information in this bulletin was obtained from SCDOT materials and its website, www.dot.state.sc.us.

Secondary Roads System

South Carolina's road system evolved over an 80-year period, most of it occurring prior to the passage of the Home Rule Act in 1975. In particular, from the 1940s and continuing through the 1960s, it was the legislature's intent that the state assume an increasing portion of the burden of maintaining and operating secondary roads. This was considered beneficial, because the roads would be under a central state agency that could ensure uniformity of highway design, coordination of planning and lower overhead costs. Also, local entities did not have the funds, equipment or personnel to maintain these roads.

Secondary roads are the most severely under-funded and the deadliest highways (third in the nation) in the state. The state does not have a state-funded construction program to make safety improvements, so secondary roads are rapidly deteriorating. In fact, SCDOT reports that parts of the secondary road system have deteriorated to the point that they must be reconstructed rather than rehabbed or resurfaced.

Condition of South Carolina's Roads

Deferred highway maintenance is resulting in deterioration of South Carolina's roads:

  • Nearly one-third of the state's primary and interstate highways are in poor or mediocre condition. Approximately one-half of the state's secondary roads are in poor or mediocre condition. One out of every five bridges in the state is considered deficient.
  • South Carolina motorists spend $500 million per year in vehicle repairs as the result of poor road conditions.
  • Roads should be resurfaced every 12-15 years; currently, the state is on a 75-year resurfacing program. There is no resurfacing for 25,000 miles of non-federally eligible roads.
  • Maintenance has been under-funded by more than 50 percent for the last five years.
  • According to the Government Performance Project in Washington, D.C., the accumulated value of deferred maintenance for SCDOT is $5.3 billion, and the value of deferred maintenance for non-SCDOT assets is $1.1 billion.
  • South Carolina highways are the third deadliest roads in the nation, with three deaths per day. Primary, secondary and county roads carry 74 percent of the traffic, but approximately 90 percent of all crashes occur on those roads.

Funding for South Carolina Roads

State Funding

South Carolina state highway funding per mile is the lowest in the nation. The state maintains twice as many miles as Georgia and approximately one-half as many miles as North Carolina. However, South Carolina's budget is only one-fourth the size of North Carolina's and three-fourths the size of Georgia's.

The state imposes a 16-cent per gallon fuel user fee (fifth lowest in the nation) that has not been increased or adjusted for inflation since 1987. During this same period, the Consumer Price Index grew by 81 percent and traffic by 65 percent. When gas prices rise, as they have in the past few years, fuel revenues go down. Improved fuel efficiency also causes revenues to drop (12 percent between 1990 and 2000). The only way to increase revenues is to consume more fuel, which puts an even greater strain on a deteriorating road system, requiring more maintenance and new construction.

Virtually all state funding (73 percent) for South Carolina highways comes from the motor fuel user fee, with only 27 percent coming from other sources. In 1970, state-source highway funding represented 17 percent of the state budget. Today, it represents 6 percent. Across the Southeast, 51 percent of state highway funding is derived from sources other than fuel user fees.

The state gas tax generates approximately $542 million in revenue, but not all of it goes for road construction and maintenance. The breakdown is as follows:2

  • $5 million goes to the General Fund;
  • $10 million supplements the "C" Funds Program;
  • $3 million goes to the Department of Natural Resources for water recreational purposes;
  • $3 million goes to the International Fuel Tax Agreement to help balance the motor fuel revenue each state gets from truckers. Because gas prices are generally lower in South Carolina, the state loses money under this program;
  • $11.3 million is used to pay debt service;
  • $3 million goes to mass transit; and
  • The balance (approximately $505 million) goes for highway maintenance, SCDOT operations and matching federal funds.

2Information provided by the S.C. Transportation Policy and Research Council.

Federal Funding

The federal government imposes an 18-cent per gallon fuel user fee. The revenue is sent to Washington where annually Congress appropriates these funds back to the states as federal aid for highways. South Carolina is a donor state: for every dollar sent to Washington, the state receives at least 92 cents.

Federal funds are primarily used for new construction and generally cannot be used for routine road maintenance. About one-half of the state's highway system is not eligible for federal highway funds.

Another issue is that the state is required to match federal funding with state or local dollars. The match ratio is generally 80 percent federal to 20 percent state funds. These funds come back to the state on a reimbursement basis. This means that the state must pay the entire cost up-front before being reimbursed by the federal government. This siphons off state funding that would be used for maintenance activities.

South Carolina's total federal-aid program, including match, is approximately $600 million per year. The state also had a large increase in federal funds from the TEA-21 Act, and in 2005, the SAFETEA-LU Act provided a modest increase in federal funds. The next Transportation Reauthorization Act will come in 2010.

Federal funding is a double-edged sword. With increases in federal funding, the state must increase its matching funds and provide more funding up-front. As a result, even less monies are able to go toward road maintenance and improvements.

"C" Funds Program

The "C" Funds Program began in 1946 with the intent to pave farm-to-market dirt roads in the state highway system. At the time, state funds had been customarily used to develop the state's primary roads system, but no funds were being expended on local or "secondary" roads. The General Assembly saw the shortcomings of local governments trying to provide for the maintenance of these roads and adopted an act that divided the state highway system into primary and secondary roads. They allocated $6 million per year for three years to be spent on the secondary road system.

Contrary to conventional thought, "C" does not stand for "county" or "construction." At the time, there were three lists of funds for secondary road construction. "List A" was federal funds; "List B" was miscellaneous state funds; and "List C" was funding for the secondary road system. Over time, it became the "C" Funds Program.

The initial funding of the secondary road system was inadequate to sustain these roads in good condition. A permanent source of funding was found in the form of a gasoline user fee.

Allocation of "C" Funds

Funds for the "C" Program come from a 2.66-cent per gallon user fee on gasoline sales that are deposited in the County Transportation Fund and allocated to the counties (§12-28-2740). This fee generates approximately $87 million annually. "C" funds are apportioned as follows:

  1. one-third in the ratio of county land area to the total land area in the state;
  2. one-third in the ratio of county population to the total population of the state; and
  3. one-third in the ratio of rural road mileage in the county to the total rural road mileage in the state.

In addition, DOT annually transfers to "donor counties" a total of $9.5 million in the ratio that the donor county's contribution exceeds "C" fund revenue allocated to that county to the total excess contributions of all donor counties.

County Transportation Committees

The expenditure of "C" funds must be approved and used to further a countywide or regional transportation plan adopted by the County Transportation Committee (CTC), which is appointed by the county legislative delegation and made up of fair representation from municipalities and unincorporated areas of the county. The legislative delegation may abolish the CTC and devolve its powers on the county governing body (i.e., Berkeley, Dorchester and Georgetown Counties).

Expenditure of "C" Funds

Of a county's annual apportionment:

  1. Up to $2,000 may be expended for administrative expenses related to activities of the committee;
  2. At least 25 percent, based upon a biennial averaging of expenditures, must be expended on the state highway system for construction, improvements and maintenance. DOT administers these funds; and
  3. Up to 75 percent may be expended for local paving or improving county roads, for street and traffic signs, and for other road and bridge projects. The county may also use these funds to issue county bonds or state highway bonds, pay directly for highway projects— including engineering, contracting and project supervision—and match federal funds available for appropriate projects.

No more than 300 percent of the county's total apportionment for the most recent year can be carried forward as uncommitted funds from one year to the next.

Conclusion

There is little question that South Carolina's roads are some of the poorest in the country, and because of an unwillingness to provide adequate funding, there is little hope for change. The transfer of roads from the state system without needed funding is a recipe for disaster—South Carolina already has the third deadliest roads in the nation. Local governments do not receive enough revenue from the "C" funds program to properly maintain the roads under their care, much less for an increase in the number of roads they would have to maintain.


Aug. 30, 2007
Indigent Defense Act — Act 108 of 2007

Act No. 108 of 2007 (R. 154, S. 446) is intended to create a structure for more comprehensive delivery of public defender services in South Carolina's criminal courts in a manner similar to that of the solicitor system. This Technical Bulletin is intended to help you understand the structure and some of the questions which have arisen regarding the Indigent Defense Act, Act No. 108 of 2007. The SCAC staff is available to assist you with general questions at 1-800-922-6081. The county attorney should be consulted for specific questions about or interpretations in your county or circuit.

The Indigent Defense Commission (referred to as ‘commission' in this document) will have some of the data needed for implementation. The commission's Executive Director is Patton Adams, (803) 734-1344, and the Deputy Director and General Counsel is Hugh Ryan, (803) 734-1338.

Implementation is complicated by the fact that the July 1, 2008, effective date was deleted and it became effective June 21, 2007. The Indigent Defense Act was not reflected in this year's state budget. The commission recently got approval from the Budget and Control Board for 32 FTE's, which are the 16 Circuit Public Defenders and one administrative person per circuit. The commission indicated they have funds for these positions until the General Assembly reconvenes and additional budget requests can be made.

The commission anticipates a two-year implementation schedule with half of the Circuit Public Defenders being appointed in 2007-08 and the remainder being appointed in 2008-09. The circuits being focused on for 2007-08 include Circuits 1, 3, 4, 5, 9, 10, 11, 12, 13 and 16 (a list of the circuits and their constituent counties is attached for your convenience). It is expected that only eight of the ten mentioned will complete the process this first year. The commission asked the circuit selection committees in the mentioned circuits to forward their nominations to the commission for approval by Sept. 17, 2007.

In the interim, the commission has indicated that maintaining the status quo is the manner in which to proceed. This position is supported by §17-3-600, which states that all contracts with private attorneys and public defender corporations remain in effect until the earlier of their expiration or June 21, 2008, and the provision of §17-3-570, which states that all employees currently employed pursuant to §17-3-570 may not be terminated for a period of one year except for cause.

There are at least 46 different structures and combinations of factors which will make implementation of the Indigent Defense Act somewhat different in each circuit and, perhaps, there will be differences within a circuit after implementation is complete as well. This Technical Bulletin is designed to give a starting point for your understanding of this act and the implementation process.

Terminology

The act creates definitions which apply to Chapter 3 of Title 17. Below are some of the more pertinent terms which are defined in §17-3-5.

'Commission' is the Commission on Indigent Defense. This commission existed prior to the passage of Act 108, but the duties of the offices were expanded and made more specific.

‘Circuit public defender' is the head of the public defender office for an entire judicial circuit (referred to as the ‘Circuit PD' in this document). The Circuit PD is the individual who, pursuant to §17-3-520(B), administers the day-to-day operations for criminal indigent defense in the circuit, maintains financial records and case statistics, prepares a budget to be submitted to the executive director of the commission, and establishes administrative management procedures for the circuit and county public defender offices, among other duties. The Circuit PD is also the hiring and firing authority in the public defender office for the circuit. The Circuit PD is a full-time state employee with the same compensation and benefits as a circuit solicitor. The Circuit PD's salary and fringe benefits will be paid by the commission from the commission's budget.

'Chief county public defender' is the public defender appointed by the Circuit PD to assist in managing and supervising indigent defense representation in one or more counties within the circuit. 'Assistant public defender' and 'public defender' are also used in the act and refer to the rest of the attorney employees in the public defender office.

‘Administering county' is the county with which the Circuit PD has an agreement for administering of state and county indigent defense funds. There may be a need to address wrinkles in the implementation process and issues not spoken to by the act in this agreement as well. The public defenders in the circuit are employees of the administering county, the expenses of which are to be reimbursed from state and county funds available to the Circuit PD's office (§17-3-540(B)).

The Circuit Public Defender

The Circuit PD is nominated by a selection panel, and that nomination must be approved by the commission. The members of the selection panel are elected by the attorneys of the respective county bar associations according to the formula in 17-3-510(A), which is based upon population and appropriations by individual counties for indigent criminal defense. Each county is to have at least one representative on the panel. The commission has notified the county bar presidents, and the formation of the circuit selection panels and nominating process for Circuit PD's should be completed shortly. The nominated Circuit PD's will then be either approved or rejected by the commission.

The Circuit PD has a list of responsibilities in §17-3-520(B), including: administering and coordinating the daily activities of the public defender office for the circuit, keeping caseload and outcome statistics, expenditures of the public defender office, preparing an annual proposed budget for submission to the executive director of the commission, and establishing administrative management procedures for the county and circuit public defender offices.

The Circuit PD is responsible for entering an agreement between the Circuit PD and a county within the judicial circuit to be the administering county for the public defender office's funds, and any funds are to be directed to the administering county. The administering county is to account separately for the public defender's funds (§17-3- 560).

Public Defender Personnel

The Circuit PD is authorized to employ personnel in several different places in the act:

  • §17-3-530(A) authorizes the employment of one or more chief county PDs;
  • §17-3-540(A) authorizes the employment of chief county PDs, assistant PDs, investigators, and other staff;
  • §17-3-570(B) authorizes the employment of administrative, clerical and paraprofessional personnel; and
  • §17-3-520(B)(8) authorizes the contracting with independent counsel in the case of conflicts or when necessary or advisable.

All of these grants of employment authority state that the employees serve at the pleasure of the Circuit PD. The exception is §17-3-530, but the chief county PD position is also addressed in §17-3-540 which does contain "serve at the pleasure of the Circuit PD" language. In §17-3-580, public defenders are once again stated to serve at the pleasure of the Circuit PD. As such, there is no grievance right for employees of the Circuit PD.

However, §17-3-570(A) states that "no employee currently employed pursuant to this section (§17-3-570) may be terminated, except for cause for a period of one year from the effective date of employment by the circuit public defender office." Presumably, this gives employees a one-year transition following the change from county public defender offices to circuit-based public defender offices. There is no definition of "cause" or any process by which an employee could question or challenge a termination in the act. Presumably, a public defender employee would be able to file a grievance like any other county employee with the appeal being back to the department head, in this case the Circuit PD.

The employees of the public defender office, other than the Circuit PD, are employees of the administering county for the circuit. This is stated in §17-3-540(B) and §17-3-570(C). However, §17-3-570(A) states that all public defenders and other personnel in the office employed on a full-time and part-time basis are considered employees of the public defender's office. This may be interpreted to mean that part-time employees are to be treated as employees and not contract workers who are not entitled to benefits. However, contract public defenders may continue in a contract worker status, if the Circuit PD contracts with them pursuant to §17-3-520(B)(8).

The employees' salaries and fringe benefits may not be less than what they are earning on the effective date of the employment by the Circuit PD, and accrued leave must be carried over (§17-3-570(A)). It is conceivable that a public defender earned leave at a higher rate than the rate earned by the administering county's employees and would therefore be grandfathered at the higher rate—at least until the general rate became greater than the public defender's former scale.

Section 17-3-570(C) provides that personnel of the public defender's office shall be compensated based upon the unclassified service schedule of the South Carolina Merit System of Personnel Administration. "State-paid" employees of the office have their compensation set by the Circuit PD in accordance with the class to which the person is appointed and the step of the salary schedule. The only "state-paid" employees at this time are the Circuit PD and the one assistant who is paid by the commission.

County Responsibilities

Section 17-3-590 requires all of the counties of the judicial circuit to provide a pro rata share—according to population—of the office space, utilities, telephone expense, materials and supplies for the public defender office.

Section 17-3-550 codifies a proviso contained in the state budget for several years. This section prohibits funding public defender operations below that of the immediate previous year. Obviously, no one-time funds should be appropriated to a public defender office, unless the idea is to permanently increase the appropriation to the public defender.

Administering County

The administering county is the county which has entered into an agreement with the Circuit PD (§§ 17-3-5 and 17-3-560). The administering county is to account for the receipt and disbursement of public defender funds and keep those records separate from other funds administered by the county (§17-3-560). The Circuit PD's employees become the administering county's employees and receive that level of fringe benefits (§17-3-540(A)).

Section 17-3-540(B) states that the administering county must pay all personnel costs and must then be reimbursed from operational funds of the public defender office. Section 17-3-560 states that the Circuit PD shall expend the funds received by the public defender office, including reimbursement to the administering county for employee compensation and fringe benefits.

Administering County Agreement

The agreement entered into between the Circuit PD and the administering county is a critical document. Entering this agreement makes Circuit PD employees all employees of the county. This agreement is also where some of the details of administration not present in the act can be clarified and disagreements avoided.

The agreement should have a term. Having the agreement expire at the end of one or two years will allow for revisions to address situations which arise which were not foreseen at the time the agreement was entered into or any change in policy and procedures. Any provision for an automatic renewal should also have a provision to outline how either party may notify the other of an election not to renew.

There are a number of provisions which may need to be addressed in the agreement to make the role of administering county more manageable and predictable. Addressing questions in the agreement will also make the interaction between the administering county, other counties in the circuit and the Circuit PD's office much smoother. Those provisions which may need addressing include:

  1. Personnel policies of the county, including:
    • office hours, holidays, annual leave accrual, sick leave accrual and drug screening, pre-employment physicals, FMLA, inclement weather policies, sexual harassment policies, policies regarding county employees bidding at county auctions and travel expense policies;
  2. Procurement policy;
  3. Financial audit policy and procedures;
  4. Financial policies and procedures including:
    • record-keeping, payroll policies and schedules, schedules for budget requests, and equipment inventory procedures; and
  5. Insurance coverage and procedures for:
    • workers' compensation, unemployment, legal malpractice, health insurance, disability insurance, etc.
    • reimbursement or cost allocation for administrative tasks performed by the administering county from a budget outside the public defender office.

Although the act clearly states that the administering county is to be reimbursed from the funds available to the Circuit PD for expenses related to the office, it is up to the administering county to ensure that it does not pay more expenses than the Circuit PD will have available throughout the fiscal year and that there is a reserve fund policy to address years in which there are mid-year budget cuts.

South Carolina Judicial Circuits and Member Counties:

First – Calhoun, Dorchester, Orangeburg

Second – Aiken, Bamberg, Barnwell

Third – Clarendon, Lee, Sumter, Williamsburg

Fourth – Chesterfield, Darlington, Dillon, Marlboro

Fifth – Kershaw, Richland

Sixth – Chester, Fairfield, Lancaster

Seventh – Cherokee, Spartanburg

Eighth – Abbeville, Greenwood, Laurens, Newberry

Ninth – Berkeley, Charleston

Tenth – Anderson, Oconee

Eleventh – Edgefield, Lexington, McCormick, Saluda

Twelfth – Florence, Marion

Thirteenth – Greenville, Pickens

Fourteenth – Allendale, Beaufort, Colleton, Hampton, Jasper

Fifteenth – Georgetown, Horry

Sixteenth – Union, York


Aug. 8, 2007
2007 Legislative Changes Related to Land Use and Planning

This Technical Bulletin outlines changes adopted by the General Assembly relating to local land use planning that counties need to be aware of. Please consult your county attorney, if you have questions about the interpretation or application of these changes. The SCAC staff is also available at 1-800-922-6081 to address general questions.

Act No. 31 (R. 52, S. 266): The Priority Investment Act

Act No. 31 is the S.C. Priority Investment Act. The General Assembly amended Title 6, Chapter 29 related to comprehensive plans to explicitly address affordable housing and transportation issues and create a formal process for interjurisdictional communication.

Elements Required in Comprehensive Plans

The act amends §6-29-510(D) to add two new elements and expanded a third element required in a local comprehensive plan.

The "housing element" outlined in §6-29-510(D)(6) has been expanded to require counties to analyze "unnecessary nonessential regulatory requirements." These are defined in §6-29-1110(6) as development standards and procedures that are determined by the local body as not essential to protect the public health, safety or welfare, and would otherwise make a proposed housing development economically infeasible. This section also requires the county to analyze the use of market-based incentives that may be offered to encourage development of affordable housing. Such incentives may include density bonuses, design flexibility and streamlined permitting processes.

A new "transportation element" has been added in §6-29-510(D)(8) that examines aspects of local transportation issues and likely funding. This element requires a more comprehensive examination of the county's transportation facilities, including major road improvements, new road construction, transit projects, pedestrian and bicycle projects. The transportation element must be developed in coordination with the current land use element found in §6-29-510(D)(7). Prior to the 2007 amendments, counties were required to consider their transportation networks as part of the broad "community facilities" element currently found in §6-29-510(D)(6). Formerly, there were no specific elements of the transportation network that had to be examined.

A "priority investment element" has been added in §6-29-510(D)(9). The priority investment element requires an analysis of likely sources of federal and state funding for public infrastructure that may be available, and a recommendation of projects for expenditure of those funds over the next 10 years. This element requires that the prioritization of projects must be done through coordination with adjacent and relevant jurisdictions and agencies. This section defines these groups as counties, municipalities, public service districts, school districts, public and private utilities, transportation agencies and other public entities that are affected by or have planning authority over the public project. Coordination requires the written notification by the local planning commission or its staff to the relevant and adjacent jurisdictions or agencies providing them the opportunity to submit comments to the planning commission or its staff concerning the project. Failure to identify or notify an adjacent relevant jurisdiction/agency does not invalidate the plan or give rise to a civil cause of action.

Zoning Districts

Act No. 31, amends §6-29-720(C)(7) by creating a new "priority investment zone." This new "zone" encourages counties to adopt market-based incentives or relax or eliminate unnecessary nonessential housing regulatory requirements to encourage private development in the priority investment zone. The use of the priority investment zone in an ordinance is optional. This section further encourages the county to provide that "traditional neighborhood design" and "affordable housing" must be permitted within the priority investment zone.

Zoning Ordinance Prerequisite

Section 5 of the act amends §6-29-1130(A), the land development regulation provision, to require the adoption of the community facilities, housing and priority investment elements before the local government may prepare and recommend for adoption regulations governing the development of land within the jurisdiction. Prior to the 2007 amendments, only the adoption of the community facilities element was required.

New and Expanded Definitions

Act No. 31 also applied the definitions in §6-29-1110 to all of Chapter 29. It would be prudent to check the county ordinances for any impact from this change.

"Affordable housing" is defined in §6-29-1110(1) where the total cost for a dwelling unit for sale—including mortgage, amortization, taxes, insurance and condominium/association fees—constitute no more than 28 percent of the annual household income for a household earning no more than 80 percent of the area median income, by household size, as reported by U.S. Housing and Urban Development (HUD). In the case of rental units, the total cost for rent and utilities can constitute no more than 30 percent of the annual household income for a household earning no more than 80 percent of the area median income, by household size, as reported by HUD.

"Traditional neighborhood design" is defined in §6-29-1110(5) as development designs intended to enhance the appearance and functionality of a new development so that it functions like a traditional neighborhood or town. These designs make possible higher residential densities, a mixture of residential and commercial land uses, single- and multi-family housing types, and pedestrian- and bicycle-friendly roadways. Overall, the aim of this portion of the act is to encourage local governments to reevaluate their comprehensive plans in such a way as to slow the growth of sprawl, prioritize projects and funding, and create new stocks of affordable housing throughout the state.

Effective Date

Act No. 31 took effect May 23, 2007. Section 6 of the act provides that counties that have recently adopted comprehensive plans will not have to consider the new elements until the next review of the plan pursuant to §6-29-510(E), the five-year provision. It appears that the language of Section 6 requires a county that is currently reviewing their comprehensive plan to include the provisions of Act No. 31, if final action on the plan had not been taken prior to May 23, 2007. It is recommended that counties use their best efforts to address inclusion of each of the amended elements required. These best efforts will necessitate that some counties reevaluate project priorities pursuant to §6-29-510(D)(9). The prioritization of projects may require the county to reopen certain elements of their plan for public comment from adjacent jurisdictions and to give additional written notifications.

Act No. 113 (R. 70, S. 65) — Permits and Restrictive Covenants

Act No. 45 (R. 71, H. 3456), as amended by Act No. 113 (R. 170, S. 65) concerns permits issued by local governments that have notice of restrictive covenants by adding §6-29-1145 to the Code of Laws. The goal of §6-29-1145 is to reduce conflicts between private property holders that are parties to private agreements restricting otherwise lawful land activities. The legislation requires local governments to deny permit applications where there is actual knowledge of any recorded restrictive covenants which are in conflict with the requested use.

Section 6-29-1145(A) requires local governments to inquire in the permit application, or in written instructions provided to the applicant, if a tract or parcel of land is restricted by a recorded covenant that is contrary to, conflicts with or prohibits an activity for which a permit is being sought. This provision will require counties to evaluate their permit applications and add new language requiring an applicant to provide information about any private agreements restricting land use activities, or provide written instructions to the applicant concerning this issue.

Section 6-29-1145(B) requires that if the planning office has actual notice of a conflicting restrictive covenant, the permit not be issued. A local government has actual notice, if there is information about the existence of a conflicting restrictive covenant in any one of three specific instances; in the application for the permit, from any supporting materials supplied by the person seeking the permit, or from any other source, including other property holders. A local planning agency is not required to conduct a search in any records offices for filed restrictive covenants.

Act No. 113 was adopted to avoid any interpretation of §6-29-1145 that would require the county to perform a title search on property for which a permit has been requested. If the local government has actual notice, then a permit can only be approved if they have received confirmation from the applicant that the covenant has been waived. Section 6-29-1145(B)(3) states that the waiver can be by action of the other property holders subject to the covenant or by court order. The burden is upon the permit applicant to provide the written proof that the covenant has been waived or is no longer valid.

Definitions

"Actual Notice" is defined in §6-29-1145(C)(1) not to be constructive notice of documents filed in local offices. The act explicitly does not require the local planning agency to conduct searches in any records offices for filed restrictive covenants.

A "restrictive covenant," as defined in §6-29-1145(C)(3), is not a restriction concerning a type of structure that may be built on a parcel of land. The clear import is that architectural appearance controls or mobile home prohibitions are to be disregarded.

"Permit," for purposes of §6-29-1145, is not defined. Section 6-29-1145(C)(1) states that permit does not mean an authorization to build or place a structure on a tract or parcel of land. It is likely that any activity, other than a building permit, tied to real property, tracts or parcels that require an authorization by local government will be affected by this act. Interpreting the act broadly, if a property owner will be required to seek approval from the local government for a particular land use, then the local government must inquire in the application if a restrictive covenant prohibits the use. If there is, then the land use cannot be approved. Based upon the broadest interpretation of the term "permit," the act will apply to a wide number of permits and land use applications, and will vary among counties based upon specific county ordinances.

The permits/applications affected by this legislation could include, but are not limited to, zoning variances, applications for rezoning, subdivision of lots, and stormwater and other environmental permits. It is also possible that in counties that have business license ordinances and ordinances governing the operation of home-based business that these activities will also fall under this legislation. County officials tasked with permitting development or planning should review their local ordinances governing land activity to determine the extent that this act will affect their permitting activity.

Legal Liability

The potential liability to county government is likely to be minimal. Restrictive covenants are legal contracts and are only enforceable between the parties to the extent that they conform to applicable local, state or federal law. Disputes arising over the enforceability of an agreement would be between the parties. In §15-78-60(12) of the S.C. Tort Claims Act, counties retain sovereign immunity from liability from the licensing powers or functions exercised by a government entity, including the issuance or denial of a permit.

Effective Date

The inquiry and notice provisions in §6-29-1145 took effect June 27, 2007 and apply to any applications for a permit made on or after July 1, 2007.

Click here to review the acts discussed in this Technical Bulletin. Please consult your county attorney, if you have questions about the interpretation or application of these changes. SCAC's staff is also available to answer general questions at 1-800-922-6081.


Aug. 7, 2007 (Revised Sept. 17)
Derelict Mobile Home Legislation — Act 45 of 2007

The South Carolina legislature enacted Act 45 of 2007 (R. 71, H. 3456), which provides a mechanism to address abandoned mobile homes. A copy of Act 45 is attached for your convenience.

What Structures are Covered?

A mobile home is defined in S.C. Code §6-1-150(A)(5) as a structure, not including a modular home, designed for temporary or permanent habitation and constructed to permit its transport on wheels, temporarily or permanently attached to its frame, from its place of construction or sale to a location where it is intended to be a housing unit or a storage unit. Mobile home includes both mobile and manufactured homes. S.C. Code §6-1-150(A)(1) defines a "derelict mobile home," as a mobile home that is:

  • not connected to electricity or not connected to a source of safe potable water supply sufficient for normal residential needs, or both; or
  • not connected to a DHEC-approved wastewater disposal system; or
  • unoccupied for a period of at least 30 days and for which there is clear and convincing evidence that the occupant does not intend to return on a temporary or permanent basis; and
  • that is so damaged, decayed, dilapidated, unsanitary, unsafe, or vermin-infested that it creates a hazard to the health or safety of the occupants, the persons using the mobile home or the public.

Who May Remove a Derelict Mobile Home?

The local official may seek to remove the home and either sell or destroy it by applying to the local magistrate and following the procedures in S.C. Codes §6-1-150 and §29-15-10.1 A "local official" is defined in S.C. Code §6-1-150(A)(4) as either the building official or the zoning official.

1 The owner of the land on which the derelict mobile home is located may also remove the home and either sell or destroy the home by applying to the local magistrate and following the procedures in S.C. Codes §6-1-150 and §29-15-10.

What is the Procedure for Removing a Derelict Mobile Home?

If a local official is seeking to have a mobile home determined derelict so that it may be removed and destroyed, he must file a Petition for Removal and Destruction of Derelict Mobile Home with the magistrate court and pay a filing fee of $80.00 (the petition form is available at the magistrate's office). The local official must provide the court with written confirmation that the mobile home has been inspected and meets the requirements for removal and disposal as provided in S.C. Code §6-1-150(A)(1).

Once the magistrate has held a hearing and issued an order declaring the mobile home derelict, the local official must file a Motion and Affidavit for Abandoned Mobile Home (form available at the magistrate's office), apply to the DMV and the county auditor for the name and address of any owner of the mobile home and any lienholders, and provide written notice by certified or registered mail to any owners and lienholders that the mobile home has been declared a derelict home and that there is a pending matter in the magistrates court.

In addition to written notice by certified or registered mail, the local official must post a weatherproof notice on each door of the home with a date, contact name and number and name of the magistrate and location of the court where the action is pending concerning the mobile home. The notice must be posted on the home for 30 consecutive days. Once the 30 days has passed, the local official shall notify the magistrate's office, which will then schedule a final hearing and issue an order for the removal and sale/destruction of the derelict mobile home. As a part of the order, the court may order costs to the county against the owner of the mobile home upon submission of an affidavit and itemization of costs.

If the local official wishes to have the mobile home declared derelict and sold, he must follow the same procedures outlined above. The magistrate will issue an order for removal and sale/destruction of the derelict mobile home, followed by a public sale of the home by the court. Upon completion of the sale, the magistrate will issue an Order of Sale.

What County Resources are Available to Remove a Derelict Mobile Home?

The county may, by ordinance, impose a registration fee of $25 when locating a mobile home in the county to defray the cost of location, identification and inspection of abandoned mobile homes. The registration fee may be assessed in addition to all other fees and charges relating to a manufactured home or mobile home, and may be required to be paid before electrical connection. The statement in the previous version of this bulletin indicating that these funds could also be used for magistrate filing fees, as well as removal and disposal costs, is inaccurate. Please note this when preparing your ordinance.

Can a Derelict Mobile Home be Removed from the Tax Rolls?

S.C. Code §12-49-85(D) provides that upon the receipt of satisfactory proof to the county auditor that a derelict home has been removed and disposed of in accordance with S.C. Code §6-1-150, the county auditor shall remove the derelict mobile home permanently from the duplicate list. Upon removal from the duplicate list, any unpaid taxes, uniform service charges, assessments, penalties, costs of collection, and any other amounts billed on the tax notice, which are due as a result of the value of the derelict home, are waived.

The owner of the mobile home is liable for the costs of removal and demolition of the home, and these costs may be waived only by order of the magistrates court or if the county has a program that covers removal and disposal costs. A landowner who is the owner of the derelict mobile home and is unwilling or unable to pay the costs of removal and disposal, may have a lien for the costs of removal and disposal placed upon the real property where the derelict mobile home was located.

You should consult your county attorney, if you have any questions about removal of derelict mobile homes. SCAC's staff is available at 1-800-922-6081 for general questions.


June 14, 2007
Passing Workers' Compensation Reform

The S. 332 (Workers' Compensation Reform) Conference Committee issued its report as the session was coming to a close. In order to become law, the report will have to be approved by the House and Senate and signed by the Governor.

The bill, although not perfect, represents a significant improvement to current law. SCAC staff is requesting that county officials contact their Senators, Representatives and the Governor's Office to request that they support this vital legislation. Listed below is a detailed analysis of the Conference Committee Report.

Appeals

Appeals from the full commission will now go to the Court of Appeals (bypassing circuit court).

Fraud

Expands the definition of "false statement or misrepresentation" to specifically include:

  1. Intentional acts of false reporting by employer of business activity;
  2. Miscount or misclassification by an employer of its employees;
  3. Failure by insurer to timely reduce reserves;
  4. Failure by insurer to account for SIF or other third party reimbursements; and
  5. Failure by insurer to provide verifiable information to insurance rating bureaus (NCCI) and the Department of Insurance (does not apply to self-insurer including pool members).

States that "undeserved economic benefit" includes favorable insurance premium, payment schedule, award or settlement.

Increases the penalties for fraud:

  • misdemeanor if economic benefit received is less than $10,000;
  • felony if economic benefit received is $10,000 or more, or for two or more violations regardless of the amount received.

Authorizes the Attorney General's Office to hire a forensic accountant for the Insurance Fraud Division.

Motor Carriers/Independent Contractors

Does not apply to counties.

Commission Forms

Parties must be specific in completing forms (the commission has standardized forms)—for example: employee's notice of claim cannot declare "all body parts" unless the employee died from the accident, and employer's answer cannot declare "all defenses apply" unless all of them do apply.

A commissioner may consider a condition or defense not included in the original form, if it is shown that:

  1. The employee's condition is caused by the injury and that the employee did not know about the notice of the condition when he completed the form (does not excuse failure to amend notice);
  2. The employer had no knowledge of the facts supporting the omitted defense.

All parties must verify that the contents of their statement are accurate.

Commission

If there is a vacancy for 60 days or more, the commission can vote on a deputy commissioner to take testimony and make a recommendation, but a commissioner must make the award.

Governor appoints chairman, but if he does not, a majority of the commission would elect an interim chairman who would serve until the Governor makes an appointment.

Commission reviews could be made by all commissioners or three-member panels (excluding hearing commissioner) appointed by the chairman.

Commissioners may hire an administrative assistant.

Commission to keep files for 15 years in paper or electronic form.

Commissioner must make written findings substantiating the award.

Contempt

Commission has contempt authority, if award is ignored without good cause.

If contempt is determined, person failing to abide by award pays employee's costs for attorney and enforcement of award and may be fined up to $500 per day of violation.

Commission must notify Department of Insurance (DOI) of failure to pay benefits, and DOI may impose penalties if there has been a violation of the insurance code (does not apply to self-insurers, including pool members).

If commission discovers pattern of failure to pay benefits (three or more intentional failures within two years), the commission must report the failure to pay to DOI. DOI may revoke the insurer's license upon determination that failure to pay at least three times within two years was intentional (this provision should not affect counties because self-insurers, including pool members, are not regulated by the DOI).

Fines

Increase fines for failure to provide insurance from 10 cents to $1 for each employee, but not more than $100 per day.

Awards

Shoulder is added to scheduled injuries—valued at 300 weeks;

Hip is added to scheduled injuries—valued at 280 weeks;

An employee with a permanent physical impairment or preexisting condition who suffers an injury on the job can receive compensation for the resulting disability caused by the permanent physical impairment and the injury. The employee must have medical evidence to show the injury aggravated the permanent physical impairment (or vice versa). If an injury is limited to one body part and it does not affect another body part, the employee can only receive compensation for a scheduled injury (except when an employee suffers a back injury that alone causes total disability). This section is a fix for Ellison v. Frigidaire.

Rebuttable presumption that 50 percent loss of use of back is total and permanent disability (assumes 50 percent loss of back is total disability, but employer has the ability to show otherwise). If 49 percent or less loss of use of back, can receive compensation up to 300 weeks; if 50 percent or more loss of use, can receive compensation up to 500 weeks (proportional to disability).

Representation

If both parties are represented by an attorney, the employer must file the agreement with the commission; if the employee is not represented, a commissioner must approve the agreement.

Occupational Disease

Defined as disease arising out of and in the course of employment due to hazards in excess of those ordinarily incident to employment and peculiar to the occupation.

Employee must establish that disease arose directly and naturally from exposure in South Carolina to hazard peculiar to employment by preponderance of the evidence.

Defines "medical evidence."

Compensation allowed under total, partial or scheduled injury.

Repetitive Trauma

"Repetitive trauma" is defined as an injury that happens gradually and is caused by cumulative effects of repetitive traumatic events (not caused by a single event, but happens over time by doing something that strains your body over and over again).

Commissioner must make a specific finding of fact in the award that the repetitive, regular job activities caused the injury.

Employee must have medical evidence to show the employment conditions caused the injury.

Once the employee reaches maximum medical improvement, he may receive compensation for total disability, partial disability or scheduled injury.

Notice must be given within 90 days when employee knew or should have known with reasonable diligence that condition is compensable, unless reasonable excuse is made and employer is not prejudiced.

Employee must file a claim with the commission within two years after the employee knew or should have known his injury was compensable, but no later than seven years after the last date of injurious exposure (when he stopped doing the activities that could lead to a repetitive trauma injury).

Change of condition request must be filed within one year after last compensation payment.

Burden of Proof

In cases involving stress, mental injuries or mental illness that arose out of employment (no physical injury exists), the employee must prove that the employment conditions were extraordinary and unusual (as compared to normal conditions of that type of work) and have medical evidence (defined as expert testimony, documents or other material stated to reasonable degree of medical certainty by a health care provider) to show the stress, mental injury or mental illness was caused by the job.

Cases involving stress, mental injuries, heart attacks, strokes, embolisms or aneurysms incidental to normal employer/employee relations are not compensable, unless actions are taken in extraordinary and unusual manner.

In cases where stress, mental injury or mental illness are aggravated by a work-related physical injury, the employee can receive benefits only if the aggravation is:

  1. admitted by the employer; or
  2. an authorized doctor (including psychologist or psychiatrist) determines the condition is related to the injury.

Medically complex cases are defined as sophisticated cases that require highly scientific procedures or techniques for diagnosis or treatment (excludes MRI, CAT scans, x-rays and other similar diagnostic techniques).

Exemptions

Trucker – person who owns or has lease-purchase or installment purchase of vehicle and who has a valid independent contractor agreement may be exempted from Workers' Compensation, unless the driver and motor carrier mutually agree otherwise. Lease purchase or installment purchase cannot be between the motor carrier and the individual, but may be between the individual and affiliate, subsidiary, or related entity of the motor carrier as long as the financial terms are customary and usual in South Carolina.

Medical

Employer will provide medical treatment for 10 weeks after an injury and for an additional time as the commission deems the treatment will tend to lessen the period of disability as shown by expert medical evidence.

If claim is settled by Agreement for Permanent Disability/Disfigurement (Form 16) and the form does not state that the employer must provide further medical benefits, employer is no longer responsible for future medicals after one year (addresses Dodge v. Bruccoli).

Awards must be as specific as possible regarding future medicals, but the employer is not responsible for future medicals if there is lapse of treatment of more than one year unless:

  1. order/agreement says otherwise; or
  2. employee attempted to obtain treatment, but could not (through no fault of his own).

In cases involving total disability, employer is responsible for all medicals for the employee's lifetime (reverts to current law).

Communications with Employee's Health Care Providers —
Addresses Brown v. BiLo

Workers' Compensation Commission to promulgate regulations concerning rehabilitation professionals regarding their duties to the employer and employee and standards of care.

Establishes that an employee is considered to give consent for release of medical information related to job injury upon seeking treatment under Workers' Compensation.

Provides employee must be given notice of communication between health care provider and interested parties (provides threshold requirements for written and oral).

Information received in violation of this section cannot be used in any legal proceeding.

Interest Rate

Interest to be paid on unpaid award at the legal rate (provided by statute).

Second Injury Fund (SIF)

Reduces SIF assessment from 175 percent of previous year's indemnity losses to 135 percent.

Provides communication between NCCI, SIF and DOI to ensure experience modifier is properly addressed by insurance carriers.

Eliminates language relied on in Ellison v. Frigidaire (S.C. Supreme Court case).

Eliminates arthritis and "catch-all" claims as of July 1, 2007.

Last date for injuries to be eligible for SIF reimbursement is June 30, 2008.

SIF must receive notice of claim by Dec. 31, 2010. This provides for the two-year reporting period, plus time for the insurance company to figure out if it's eligible for SIF.

All documentation to accept the claim must be submitted by June 30, 2011 (currently there is no time period to submit this information).

Acceptance of claims must be made by Dec. 31, 2011. This gives the fund adequate time to review the info submitted in June.

SIF terminates on July 1, 2013; Budget and Control Board provides winding down.

Uninsured Employers Fund moves to State Accident Fund on July 1, 2013.

Lost Cost Multiplier

This provision should not affect counties because self-insurers, including pool members, are not regulated by the DOI.


June 8, 2007
Millage Rate Limitation — S.C. Code §6-1-320

The association has received numerous questions regarding the millage rate limitation in S.C. Code §6-1-320, which was amended by Act No. 388 of 2006 (hereafter referred to as Act 388).

Act 388 is commonly referred to as the property tax restructuring act or the property tax relief act. This Technical Bulletin will focus on the changes Act 388 made to S.C. Code §6-1-320 and attempts to answer the most frequently asked questions regarding the limitation. However, in some cases there is no definitive answer at this time. This is our best effort and not binding upon anyone. You should consult your county attorney, if you have questions about the interpretation and application of S.C. Code §6-1-320.

Overview of Legislation

Act 388 amended S.C. Code §6-1-320 effective Jan. 1, 2007. S. 367, R. 89, which has been signed by the Governor, additionally amends S.C. Code §6-1-320 (there are also two other bills pending which amend S.C. Code §6-1-320). To make it easier to follow the discussion in this Technical Bulletin, we have attached a copy of the new statute.

S.C. Code §6-1-320 was amended in two ways. First, Act 388 deleted the existing subsection C which provided a general override mechanism for the millage limitation. There is no override vote by a positive majority of council after a public hearing.

Second, Act 388 changed the existing millage limitation for operating purposes from the Consumer Price Index (CPI) to CPI plus the increase in the population of the entity. The specific exceptions to the millage rate limitation were revised, and they were made temporary exceptions which do not become part of the base millage upon which an increase could be applied. To utilize one of the exceptions, a super-majority two-thirds vote of council was added to the code section as well.

What Constitutes "General Operating Purposes" for Purposes of the Millage Rate Limitation?

  1. General Definition

    S.C. Code §6-1-320(A) reads in part, "...a local governing body may increase the millage rate imposed for general operating purposes...." There is no definition of "general operating purposes" in Act 388. However, S.C. Code §6-1-320(D) states that "[t]he restriction contained in this section does not affect millage that is levied to pay bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account."


  2. Exclusions from "General Operating Purposes"

    Subsection 6-1-320(D) clearly states that the millage rate cap does not apply to three specific millages which are levied by local governments. There is no language which says that the exclusion from the operation of the millage rate cap "includes, but is not limited to" or other words to that effect. Therefore, the inference is that the cap applies to all other millages levied. This would include millage to pay a capital lease, a lease-purchase agreement for personal property such as equipment which is paid out of the operating budget. It would seem advisable for a county to find any capital expenses or any bonded debt service, currently being paid out of the operations side of the budget, and move these to the non-operating budget. This would free up room for general operating purposes.


  3. "Millage Agencies"

    Some counties designate certain offices or programs as "millage agencies," and their funding is whatever amount of revenue the earmarked or set millage raises. For example, the county recreation department might be termed a "millage agency" for county budgeting purposes, and two mills may be set aside for them each year for operations. In this instance, the recreation program would most likely need to be counted as part of the county general operating millage. There is no requirement that the "millage agency" be given all or any of the allowable increase in millage and that millage capacity may also be dedicated to other purposes. If the recreation department were actually a special tax district or special purpose district, that operating millage would be kept separate from the county limitation and would be treated as a separate entity as outlined below.


  4. Other Revenue

    S.C. Code §6-1-320(C) specifically excludes revenue raised or received from other sources including fees, grants or state funds not derived from property taxes.

How is the Millage Rate Limitation Calculated?

S.C. Code §6-1-320(A) allows the millage rate for general operating purposes to be increased over that imposed the previous year by the "increase in the average of the 12 monthly Consumer Price Indexes for the most recent 12-month period consisting of January through December of the preceding calendar year, plus, beginning in 2007, the percentage increase in the previous year in the population of the entity as determined by the Office of Research and Statistics of the State Budget and Control Board."

  1. CPI Increase Calculation

    The "inflation" portion of the formula to determine the allowable millage rate increase is the average of the 12 monthly CPIs for the previous calendar year. This is a relatively straight forward calculation and will be provided by the Office of Research and Statistics (ORS).


  2. Population Increase Calculation

    The Office of Research and Statistics (ORS) is to determine the increase in the entity's population from the previous year. For counties and cities, ORS has said they will adopt the population increase estimate put forth by the U.S. Census Bureau.


    3. For school districts, special purpose districts, and special tax districts which are other than the entire county area, there is no annual growth rate U.S. Census Bureau estimate which is district specific. ORS has indicated that they would use population growth estimates for school districts which are extrapolated from the decennial census figures and apply them at a uniform rate until the next decennial census.

    There is no final word on what ORS will do for special purpose districts and special tax districts. ORS has indicated that they do not have the ability to estimate populations for these less than countywide entities and will use annual county growth estimates for these districts.

    ORS is not obligated to follow the U.S. Census Bureau estimates for counties and cities. However, a county or city would be in a much better position to appeal a population growth estimate if the county or city successfully appeals the estimate made by the U.S. Census Bureau.

    Should a county disagree with the U.S. Census Bureau estimates, they should submit a challenge of those estimates to the U.S. Census Bureau by first submitting a letter to the bureau within 180 days of the estimate's release indicating the county's intent to challenge the estimates. U.S. Census Bureau challenge worksheets should be filled out by the county and included with the letter. You can obtain the worksheets on the U.S. Census Bureau's website at www.census.gov/popest/archives/challenges.html.

  3. Negative Population or CPI

    The language of S.C. Code §6-1-320(A) was clarified by S. 367, R. 89 during the 2007 session. Now the statute clearly states that a negative CPI is deemed to be a zero for purposes of the millage limitation formula. A loss of population for an entity is also deemed to be a zero for purposes of the millage limitation formula.


    4. However, there are two other bills still being considered by the General Assembly which both contain the clarification on population loss, but do not contain the clarification for a negative CPI. It is not certain that these bills will become law or how the differences on the negative CPI would be interpreted, if the other bills became law.

Can the Millage Rate Limitation be Exceeded?

The millage rate limitation may be exceeded only when specific conditions exist. The general override by positive majority vote after a specially called public hearing was struck from S.C. Code §6-1-320(C). The four conditions in S.C. Code §6-1-320(B) allowing an override on a majority vote of council were replaced with five conditions which are similar, but not identical to the previous conditions.

To use one of the override conditions, council must vote by a two-thirds majority of the entire council, and the millage imposed above the CPI plus population limitation is a temporary surcharge which must be billed as a separate line with an explanation of the reason on the tax bill. The last sentence of S.C. Code §6-1-320(B) reads, "[t]he surcharge must be continued only for the years necessary to pay for the deficiency, for the catastrophic event, or for compliance with the court order or decree." This sentence only lists three of the five override conditions listed earlier in that subsection and raises a question about subsequent years for the other two conditions. The safer practice as to the three listed conditions would be to vote on the surcharge each year and to include a legislative finding that the condition still exists in the ordinance to readopt the surcharge.

The specific conditions for which a surcharge above the millage limitation may be imposed are:

  1. Deficiency of the Preceding Year — S.C. Code §6-1-320(B)(1)

    This exception rewords the previous language which specifically referenced §7 of Article X in the South Carolina Constitution and tracks the language of Article X, §7(b) without specific reference to the constitution. Presumably, there is no material difference.


  2. Catastrophic Event Outside the Control of the Governing Body —
    S.C. Code §6-1320(B)(2)

    This is similar to a previous exception but materially different. The exception is any catastrophic event beyond the control of the governing body. There is no longer a requirement that the condition be declared by the Governor. The catastrophic event is also no longer restricted to a natural disaster, but includes act of God, act of terrorism, fire, war, or riot. It appears that the clarifying list of catastrophic events is not exhaustive.


  3. Compliance with a Court Order or Decree — S.C. Code §6-1-320(B)(3)

    This exception rephrases the previous provision and expands it to cover all governmental entities subject to the millage limitation, not just to counties and cities.


  4. Taxpayer Closure — S.C. Code §6-1-320(B)(4)

    This provision allows a millage surcharge when there is a "taxpayer closure due to circumstance outside the control of the governing body that decreases by 10 percent or more the amount of revenue payable to the taxing jurisdiction in the preceding year." This exception only comes into play when there is a large manufacturer which closes or is destroyed. The provision does not clearly state that the revenue decrease is only the property tax revenue payable to the taxing entity, so there is some question there. This is also one of the two provisions not specifically mentioned in the last sentence of subsection (B) which allows the surcharge to continue while the condition exists.


  5. Federal or State Regulation or Statute — S.C. Code §6-1-320(B)(4)

    This condition reads, "compliance with a regulation promulgated or statute enacted by the federal or state government after the ratification date of this section for which an appropriation or a method for obtaining an appropriation is not provided by the federal or state government." The ratification date of the provision was June 6, 2006. This translates into an unfunded mandates solution, so that complying with a new federal or state mandate for which funding or a funding mechanism is not provided can be funded without displacing existing programs. This exception was also not specifically mentioned in the last sentence of subsection (B), which allows the surcharge to continue while the condition exists.


Are the School Maintenance of Local Effort and EFA Inflation Factor Permissible Overrides?

S.C. Code §6-1-320(B)(4) was deleted from the list of permissible override conditions. This is the override to meet the EFA inflation factor and the per pupil maintenance of effort in S.C. Code §59-21-1030. This deletion of the specific exception from the list of override conditions would indicate intent by the General Assembly to have the statewide millage rate limitation take precedence over the pre-existing statutory requirements to meet the inflation factor and the per pupil maintenance of local effort.

There was a provision in S.C. Code §6-1-320(B)(E) which some interpreted to mean that any local act setting a millage limitation specific to a school district, which was either more or less restrictive than the general millage rate limitation in S.C. Code §6-1-320(A), would take precedence over the statewide millage rate limitation. However, S. 367, R. 89, amended S.C. Code §6-1-320(E) to clarify that the statewide millage limitation did not supercede those local acts of the General Assembly which "are more restrictive than" the general millage limitation in S.C. Code §6-1-320(A).

There is also one other provision in the code which states that the auditor is to levy sufficient millage to meet the maintenance of local effort requirement (S.C. Code §59-21-1030). A court would most likely determine that this provision was repealed by implication given the initial adoption of a millage rate limitation and the subsequent clarification.

Are Special Tax Districts Subject to the Millage Rate Limitation?

The millage rate increase limitation in S.C. Code §6-1-320 does include operating property taxes imposed within special tax districts. However, it does not include millage rates necessary to fund repayment of indebtedness for debt specifically used for the special tax district. Special tax districts created pursuant to S.C. Code §4-9-30(5) are an entity of the county government and would therefore be subject to the cap.

In applying the cap to special tax districts which include less than the entire county area, the CPI plus population growth over the previous year is applied to the operating millage of the special tax district. This millage capacity does not carry over to the county millage in general. Care should also be taken to be sure that any restriction or limitation on millage in the creating petition or ordinance is observed.

Do Local Millage Rate or Spending Limitation Ordinances Still Apply?

Act 388 would supercede to the extent that S.C. Code §6-1-320 is more restrictive than any local limitation ordinance. The local ordinance would still be operative to the extent that it is more restrictive than the limitation in S.C. Code §6-1-320.

What are the Consequences if a County Does Not Take the Maximum Millage Rate Allowable by the Statute?

The act does not require an entity to enact an increase in the millage rate to equal the maximum allowed under the millage cap formula. The millage rate established for one fiscal year will be used as the base rate from which the county must use in determining the allowable maximum millage rate increase the next year. There is no "lookback" provision to allow the entity to use millage rate capacity which was allowed but not imposed in the previous year.

Are There Any Limitations on Reserve Accounts?

Section 6-1-320(D) specifically states that the limitations outlined do not affect millage used to maintain a reserve account. There is no statutory limitation on the size or use of a reserve account. It is always advisable to maintain a reserve account large enough to avoid the need to issue tax anticipation notes. The maintenance of a reserve account that is too large or inadvisable uses of a reserve account could potentially affect a local government's bond rating.

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