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Friday, September 17, 2021

Shady Tactics Tax Hike Anyone?

Councilman Alex Saitta explains what county council did with this new replacement tax hike to replace the illegal $20 user fee they were collecting...

If the legal millage cap was 5.3 mills, how did the Pickens County Council raise the property taxes a record amount of 9.9 mills?

I voted "No" for a variety of reasons and this was just another one one on my list. Let me explain how they got around the millage cap. 

SC State law 6-1-320 caps the annual tax increase to 5.3 mills. There are a few exemptions to the cap, which deal with emergencies or unusual circumstances. Specifically, there is a small exemption that says the council can raise taxes more than the legal cap to “maintain a reserve account” . 

The purpose of this exemption is for situations like the county gets hit with a big expense, it doesn’t have a cash reserve, and it has to borrow to plug the gap. So the county doesn’t get caught short again, the next year it can raise taxes above the cap to fund a reserve for such emergencies in the future. 

The county general account (which taxes were raised about 10 mills), has about $23 million in it that is not promised nor needed for cash flow purposes. It is a massive excess or reserve by anyone’s definition. 

Expenses paid from the operations account are things like roads, personnel, solid waste and EMS. If the expenses of any of these departments run over budget, they tap into the $23 million excess sitting in the operations account. They don’t need separate reserve accounts for each department. It is kind of like your car. The one spare serves as the spare for all 4 tires. You don’t need nor would want to drive around with the complication of 4 spares, one for each tire. 

If the true aim was solely to create a dedicated reserve account for roads inside the general account, they could have moved $3 million over from the $23 million in cash without the extra tax hike.  

I think the reason they created this unnecessary reserve account within a massive reserve was to get around the cap. If you look at the first and second readings and the other options at third reading, a reserve was not created. It was only created in the options that blew past the 5.3 mill cap. Creating this additional reserve account, in the minds of the legal staff allowed the council to blow past the millage cap in order “to maintain a reserve”. I saw it as a legal scheme or maneuver to get around the cap. Not what I'm about. 

Think about it... Using that logic, next year they could create a separate reserve account for the EMS department, inside the operations account. Again, this would allow them to blow past the millage cap in order to fund it. 

The following year they could create another reserve account, this time for solid waste. Then they could blow past the millage cap again in order to “maintain that reserve account”. 

In my mind this approach of creating a reserve account within a reserve account to get around the cap violated the purpose or intent of the millage cap law, which had exceptions for emergency situations. No emergency here. 

Think about this as well. The $23 million they already had in reserve in the operations account was due to over collection of taxes. Evidently $23 million wasn't enough. So another reserve account was created and they reached above the millage cap of 5.3, raised it 9.9 mills and took even more from the public. Now they have $26 million in reserves. Swimming in cash. There was no emergency here to warrant blowing past the millage cap. 

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