Thursday, April 29, 2021

What Is Business License Rebalancing?

Act 176, the SC Business License Tax Standardization Act, requires every local government with a business license tax to administer the tax in the same way across the state starting January 1, 2022. It also seeks to prevent cities and towns from receiving a revenue windfall or creating an unexpected revenue loss in the first year of implementation as a result of the required changes. 

To comply with Act 176, many cities and towns need to immediately begin making several adjustments to their current business license ordinances, schedules and practices. 

Before rebalancing 
First, each city and town should adjust its current business license year to the new license year, May 1 through April 30. In some cases, this will require shortening or lengthening the jurisdiction’s current license year. Changing the license year requires action by city or town council. Once the license year is changed, cities and towns should alert their businesses of the change before and during the license renewal process.

Next, city and town staff must assign each of their business license records a correct 2017 North American Industry Classification System code, or NAICS code. Once city and town staff has assigned each of their license records a NAICS code, they should ensure each business is assigned to the correct, state-mandated rate class using the 2021 Class Schedule. 

Rebalancing 
Cities and towns must also rebalance their business license tax rates to ensure revenue neutrality during the 2022 business license cycle. The Municipal Association suggests a specific format for the order of the business license data, which will help during this rebalancing process. Municipal staff should check the records to determine that the data is accurate. 

Once the data is deemed accurate, staff should begin reviewing the license tax rate for each class and suggest changes to the rates, if necessary to achieve a revenue-neutral result. The purpose of this “rebalancing” is to ensure the city or town does not collect more business license tax revenue in 2022 than it did in the 2020 license year. However, if a city or town projects it might lose revenue as a result of rebalancing, it may adjust its rates to ensure that does not happen. 

For cities and towns that haven’t regularly updated their class schedules, changes in rates for some individual businesses could be significant. Municipal Association staff are available to all cities and towns for assistance in rebalancing, which can pose challenges for those with outdated class schedules. To learn more about rebalancing, check out this podcast featuring Municipal Association Field Services Managers Charlie Barrineau and Jeff Shacker discussing the issue. 

Next steps 
After rebalancing, cities and towns should repeal their existing business license ordinances and adopt new ordinances that comply with Act 176. The Municipal Association strongly suggests adopting its 2022 model business license ordinance that fully complies with the law. 

Finally, by the end of 2021, cities and towns must set up an account with the state-mandated Local Business License Renewal Center, which allows businesses to renew their business licenses online with any city or town in the state. The SC Revenue and Fiscal Affairs Office hosts the Renewal Center, with the Municipal Association of SC providing support. 

More resources 

Thursday, April 8, 2021

Delayed Census Data and Fall 2021 Elections

by Eric Shytle, General Counsel, Municipal Association of SC 

The Equal Protection Clause of the United States Constitution and the Voting Rights Act both require that municipalities redistrict their wards to reflect population and demographic information contained in the most recently released decennial census. 

Ordinarily, the 2020 census data would already be released. This year’s data, however, has been delayed. On February 12, the Census Bureau announced that it would release redistricting data with tables by September 30. Later, the Census Bureau announced that it will release the data in a legacy format and without tables approximately a month earlier in August

Many municipalities in South Carolina have elections scheduled for this fall, and filing periods for those elections will close before the release of the census data. In any event, it will be virtually impossible for municipalities to complete the redistricting process before the November election dates. 

The federal courts have held repeatedly that no violation of federal law occurs when an outdated legislative map is used for an election, so long as the government complies with a reasonably conceived plan for periodic reapportionment

In other words, municipalities may hold their fall elections as scheduled and using the existing ward maps. Municipalities should diligently work to complete the redistricting process as quickly as practical, but they need not cancel or delay the fall elections if the new maps are not prepared in time. 

On the other hand, SC Code Section 5-15-50 allows municipalities to establish by ordinance “the time for general and special elections within the municipality.” This provision has been interpreted by courts and the Attorney General to allow reasonable extensions of the terms of incumbent councilmembers to set new election dates. It seems likely that a court would find it reasonable to extend the terms of incumbent councilmembers to allow time for redistricting. Therefore, municipalities may choose to delay the fall election until the new maps are available. 

In short, under federal and state law, municipalities may either proceed with their fall elections as planned, or they may delay these elections until redistricting is complete. The decision is ultimately one for the council, taking account of local politics, demographics and population trends. 

This recent Uptown article describes the legal background of redistricting, including the 2013 U.S. Supreme Court decision which affected the application of the Voting Rights Act.

Thursday, March 25, 2021

Adopting the 2022 Model Business License Ordinance

When the General Assembly passed Act 176, the SC Business License Tax Standardization Act, it created new standardization requirements for the cities and towns that administer this tax. It created action items that they need to undertake by January 1, 2022, even if they have made business license changes in recent years. 

The law requires that these taxing jurisdictions now all use a single due date — April 30 — and a standard license year period of May 1 to April 30. Other licensing practices must be standardized as well, including the method of calculating a business’s gross income, the setting of rate classes, as well as acceptance of a standard license application and acceptance of payments from a statewide online payment center. 

The Municipal Association of SC has created a seven-step process that cities and towns can use as a guide to comply with the law. Some critical early steps include converting to the standard license year, reviewing data and rebalancing rates to prevent a revenue windfall. 

Repeal and replace 

Once cities and towns complete the previous steps, they will have laid the necessary groundwork to tackle Step 5 in the process: repeal the existing business license ordinance and replace it with the revised model business license ordinance created by the Municipal Association to address the new law’s requirements. Because of the law’s complexities, the Association strongly encourages municipalities to repeal their existing ordinances, rather than altering and correcting those ordinances. Adoption of business license ordinances that comply with Act 176 must take place by January 1, 2022. 

The new model ordinance includes the current standard business license class schedule required by law, which cities and towns must update at the end of every odd-numbered year. It also contains a comprehensive definition of a business’ gross income as required by Act 176. 

Here are some other business license issues covered by the model ordinance: 
  • Applicability to businesses lacking an established location in the municipality 
  • Requirements for display or carrying of a license
  • Inspections 
  • Audits 
  • Assessments 
  • Penalties for nonpayment 
  • Denials, suspensions and revocation of licenses
  • Violations 
Resources 

Cities and towns can obtain the model ordinance and the standard class schedule by contacting their business license standardization liaison at the Association. The City Quick Connect podcast has a new episode featuring the Association’s Manager for Collections Programs Caitlin Cothran and General Counsel Eric Shytle discussing the purpose and importance of the model ordinance.

Thursday, March 11, 2021

Sunshine Week Begins March 14

Sunshine Week runs from March 14 – 20 and is a celebration of governmental transparency and access to public information, which is often highlighted by newspapers and news stations serving the state’s cities and towns. Be it a city council meeting or a meeting of any public body covered by the SC Freedom of Information Act, Sunshine Week focuses on the importance of transparency and the value of open government. 

As COVID-19 continues to impact the number of attendees at meetings, or moves the audience into a virtual attendance capacity, the importance of transparency and access cannot be understated.

The March 2021 edition of Uptown featured an article on cities’ use of virtual meetings as a way of keeping transparency a priority during the pandemic, including in the Town of Mount Pleasant. In it, Town Administrator Eric DeMoura said that “maintaining transparency throughout this pandemic was of utmost importance as critical decisions were made at a rapid pace and there was some business such as project approvals that needed to proceed … Transparency and access are most important during times of crisis and uncertainty.” 

Although transparency and FOIA compliance are critically important in any context for governmental bodies and their meetings, digital meeting options, can create the potential to be more open than ever before, and give residents an opportunity to tune in from home to see their government at work, making decisions that affect their daily lives. 

An important aspect of open and transparent government is making sure that governing bodies follow the law when moving from an open forum into executive session. During executive session, a governmental body will generally move from the meeting space to another secured location to talk about issues that need to remain confidential, like human resource discussions, contractual negotiations, or criminal misconduct matters. Parameters for executive session are spelled out in SC Code Section 30-4-70

The need for executive session should only arise in matters that truly need to remain confidential, as required by FOIA. The law makes public information available when possible and creates requirements for cities to follow in terms of agendas, minutes, and other meeting information. 

In South Carolina, the SC Press Association promotes FOIA and the governmental transparency that is the focus of Sunshine Week. By promoting the public’s right to know, the SC Press Association helps to ensure the people have access to information and the government is held to the highest standards. For an overall look at FOIA specifics, see the SC Press Association’s Public Official's Guide to Compliance With South Carolina's Freedom of Information Act.

Thursday, February 25, 2021

Catch Up on Coronavirus Recovery in the Latest Issue of Cities Mean Business

The Municipal Association of SC recently published the latest issue of its Cities Mean Business magazine, which features multiple examples of the work that South Carolina’s cities and towns have pursued to maintain the critical services of local government during a pandemic, and to reduce the impacts of COVID-19. 

In the last year, local mask ordinances have served as an important tool for South Carolina’s fight against the virus’s spread. An analysis of ordinances by the SC Department of Health and Environmental Control found that jurisdictions with mask ordinances experienced a 66.5% greater decrease in cases in the first week as jurisdictions with no ordinance. These ordinances require ongoing communication efforts to help residents and businesses understand the requirements of these ordinances. The facemask communication outreach efforts of Greenville, Florence and Hartsville appear in an article that examines how cities can be creative under trying circumstances

Cities and towns don’t just provide police, fire, sanitation and utilities — they often offer cultural and recreational opportunities as well. Beginning in the spring of 2020, local governments began canceling festivals and other special events, and the loss of these vital elements of community identity has been felt ever since. Another article in this issue looks at the ways that Newberry, Walhalla and Seneca developed to keep these activities alive, even during the pandemic. 

Finding ways to make city services virtual remains a focus throughout South Carolina, and two of the articles feature examples of the increasingly online nature of local government work. A story on online transactions, such as submitting building permits and paying water bills, highlights North Myrtle Beach, North Charleston and York. Another article takes a look at the e-newsletters developed in Greenwood, Mauldin and Beaufort. 

This Cities Mean Business magazine will be inserted in the spring issue of SC Biz magazine. It is also distributed to legislators and state policymakers, and mailed to  business leaders around the state. 

Those who missed the issue of Cities Mean Business from last summer can read it here. It featured stories on downtown revitalization, pandemic business assistance, economic development communication and municipal customer service.

Thursday, February 11, 2021

Catch Up on Hometown Legislative Action Week

Hometown Legislative Action Week has come and gone, but you can still experience the weeklong exploration of the 2021 Advocacy Initiatives. 

The all-online format for this year’s advocacy meeting broke the topics down into quick videos shared through email and social media. The videos remain available on the event webpage. Taking on topics like the expansion of naloxone to first responders, law enforcement reform and municipal enclaves, the short videos aim to spark conversations and action. 

One of the topics of the week, broadband internet expansion, included updates from the federal and state levels. Lawmakers are working to expand infrastructure and access to high-speed internet throughout the state. 

“Broadband can do for rural communities in the 21st century what electricity did in the 20th century,” said Rep. Jim Clyburn (D-SC). “The South Carolina legislature is to be applauded for the work it [has] done in this area. We are working at the federal level to make sure that we give them the resources necessary to make this part of South Carolina’s future going forward.” 

Rep. Jeff Duncan (R-SC) noted that 21 million people in the United States had no broadband access before COVID-19, “and that number is shocking. So that’s why it’s so important that we don’t stop the progress now. We can work on expanding broadband in a bipartisan fashion here in Congress, and on the state level.” 

The goal of Hometown Legislative Action Week is to empower South Carolina’s cities and towns to speak with their legislators on areas that impact their hometowns. Local officials should use the Association’s Advocacy Initiatives and the information shared during Hometown Legislative Action Week to start a conversation with legislators to create change in our communities. 

Beyond watching and sharing the 2021 HLAW videos, there are some other steps city and town officials can take to keep up with what’s happening at the State House:
  • Subscribe to From the Dome to Your Home, the Association’s weekly legislative report delivered by email every Friday during the session. The report takes a look at what’s happening with the Association’s Advocacy Initiatives as well as any other legislation with an impact on cities and towns. 
  • Listen to the City Quick Connect podcast, where the Association’s advocacy staff discuss the week’s legislative happenings during the session.

Thursday, January 28, 2021

Hometown Legislative Action Week Begins Monday

The Municipal Association’s Hometown Legislative Action Day — which fosters relationships between state legislators and municipal governments and calls attention to the issues that matter to cities and towns — ordinarily takes place in a single day. For 2021, however, it’s taking on a format more suitable to the need for virtual gatherings.

Hometown Legislative Action Week, which will unfold across five days of virtual content and valuable insight into the new legislative session. Each day from February 1 to February 5, the Municipal Association will send out videos explaining its new Advocacy Initiatives. The individual videos will be short and suitable for sharing to spark conversations about the issues. 

As the videos launch, those who register for email updates will be the first to get them, so be sure to register to receive the emails here. This event registration is free. 

Here’s the 2021 HLAW schedule (click to enlarge): 


Beyond registering for the 2021 HLAW, there are some other steps city and town officials can take to keep up with what’s happening at the State House: 
  • Subscribe to From the Dome to Your Home, the Association’s weekly legislative report delivered by email every Friday during the session. The report takes a look at what’s happening with the Association’s Advocacy Initiatives as well as any other legislation with an impact on cities and towns. 
  • Listen to the City Quick Connect podcast, where the Association’s advocacy staff discuss the week’s legislative happenings during the session.

Thursday, January 14, 2021

Standardizing Business Licenses in 2021

After years of work and discussion about the complexity of collecting the business license tax levied by many cities and towns in South Carolina, the General Assembly passed the SC Business License Tax Standardization Act last September. The new law standardizes many of the elements of administering the tax — elements that were previously decided by each municipality. 

The law requires these standardization measures of cities and towns with the tax by January 1, 2022:
  • License periods beginning May 1 and ending April 30.
  • Calculating the tax based on a business’ gross income for the previous calendar year or its previous fiscal year.
  • Using the law’s definition of gross income. 
  • Accepting a standardized application approved by the SC Revenue and Fiscal Affairs Office. 
  • Using the law’s standardized class schedule. 
  • Allowing businesses to make license renewal payments through an online payment system hosted by the SC Revenue and Fiscal Affairs Office. 
  • Using the law’s standardized appeals process. 
  • Setting rates for the 2022 license year — May 1, 2022, to April 30, 2023 — to prevent any revenue windfall for the taxing jurisdiction during the first year of compliance. 

During 2021, cities and towns will need to adopt business license ordinances that comply with the new law. The Municipal Association strongly recommends cities and towns repeal their existing ordinances and then replace them the Association’s 2021 model business license ordinance, which will be available soon. 

Achieving compliance with the new law will require a phased approach. Throughout 2021, the Municipal Association’s staff will work to help municipal staff comply with the new requirements. Here are a few resources for getting started: