New Cooperative Purchasing Program Now Available for South Carolina Cities and Towns

City Connect Market, a new cooperative purchasing partnership between the Municipal Association of SC and HGACBuy, allows South Carolina’s cities and towns to take advantage of volume discounts when purchasing everything from fire trucks to roll carts to professional services. 

The partnership brings to South Carolina a purchasing program first created by the Houston-Galveston Area Council of Texas in 1975. HGACBuy staff receive bids and assist with local government purchasing around the nation. The program improves pricing and can help eliminate the need for each municipality to handle all details of each competitive bid process. 

On October 14, HGACBuy and the Municipal Association will host an online partnership panel event to discuss the benefits of cooperative purchasing and how South Carolina municipalities can take advantage of the program. Registration for that event is available now. 

HGACBuy helps with purchasing in 41 major categories of products. The category for public works equipment, for example, ranges from garbage and recycling containers to construction and maintenance tools, street maintenance and sweeping equipment, utility meters and traffic control devices, among other items. 

The program also handles the purchase of services, and works with more than 800 contractors. Service categories include community planning to public relations and events, temporary staffing and hiring services, emergency planning and recovery services, sewer cleaning services and others. 

The City Connect Market webpage features links to product listings under all of the contract categories. Users can search the available products or services, or can contact the Municipal Association with a specific request. The Association will work with the product vendor to ensure that the municipality receives a quote using the HGACBuy pricing guidelines. 

After the municipality receives and approves a quote, the Association will work directly with HGACBuy to place the order. The Association serves as a liaison to assist the municipality throughout the purchasing process. Those cities and towns that wish to use this process should review their procurement ordinances to make sure that cooperative purchasing partnerships are an approved purchasing method.

Economic Development Flexibility Under the SC Business License Tax Standardization Act

Cities and towns throughout South Carolina regularly seek ways to promote economic development projects that can enhance residents’ quality of life, using a variety of state and local tools to attract and retain businesses. For many municipalities, the business license tax can serve as an economic development incentive. The passage of the SC Business License Tax Standardization Act, or Act 176, in 2020 protected the use of the business license tax as an incentive. 

While Act 176 created a standard business license rate class schedule that all cities and towns must use, it also contains three subsections that provide cities and towns flexibility to use their business license tax to address a variety of economic development scenarios. 

Creating subclasses 

SC Code Section 6-1-400(g)(2) allows a city, town or county to deviate from the standard rate class schedule and create subclassifications of businesses “based upon the particularized considerations as needed for economic stimulus or the enhanced or disproportionate demands by specific business[es]” on municipal services. 

For example, in a coastal city where tourists create higher service demands than permanent residents, that city could create a standalone classification for tourist-related industries and apply a unique tax rate to the classification. The same holds true if a town wanted to incentivize certain types of industries to locate within its borders. 

Grandfathered agreements 

Though Act 176 standardizes business licensing across the state, it recognizes that cities and towns have made local decisions for years to address local circumstances that might contradict provisions found in the new law. SC Code Section 6-1-400(h)(1) preserves special business license agreements that cities and towns may have in place prior to Act 176’s effective date of January 1, 2022. 

Any ordinance, formal or informal agreement, flat fee or unique calculation of any business’s license tax enacted before January 1, 2022, will be unaffected by the new law. This provision ensures continuity for both the local business and the city as the new law goes into effect. 

Changing the calculation of the tax 

SC Code Section 6-1-400(h)(2) affirms a jurisdiction’s authority to continue to address unique circumstances through their business license tax systems. The law states that a city or town may deviate from the standard rate class schedule in the future with an “ordinance passed for economic stimulus, an annual flat fee, or any formal or informal agreement … regarding the calculation of business license taxes.” 

More information on standardization 

While Act 176 ensured local leaders’ authority to continue to attract business and address unique economic circumstances, the law is primarily aimed at mainge doing business easier in cities and towns by standardizing the licensing process. With Act 176’s compliance deadline of January 1, 2022, approaching, cities and towns now need to be well on the way to achieving standardization. The Municipal Association’s standardization webpage outlines a seven-step process for following the law and standardizing business license practices.

Look out for the October 2021 issue of Uptown coming out next month, which will include a special section on business licensing, with numerous articles explaining specifics of complying with the new law.