State business license change could cost Greenwood $825K

CHARLIE BARRINEAU

City Manager Charlie Barrineau has joined a statewide lobbying effort in decrying a measure that if approved would make sweeping changes to business license fees that could cost Greenwood nearly $1 million a year.

But proponents of the bill argue it's needed to simplify a licensing system that makes it unnecessarily complicated for businesses operating across several municipalities.

On Friday, Barrineau and City Treasurer Steffanie Dorn issued a financial impact statement projecting a loss of $825,000 annually – or 5.3 percent of Greenwood’s $15.3 million general fund – if H. 3650 is signed into law.

The measure looks to standardize business license tax code by exempting 25 percent of a company’s income collected outside of a municipality where the business maintains a primary place of operation.

It also bars cities from charging a business not physically located in its limits a higher tax rate than those within municipal boundaries.

Barrineau said each mill generates about $50,000 in revenue for the city, so a loss of that much would mean an increase of 16 mills to the property tax rate.

“City Council would ultimately decide what to do. There would be increases to business license amounts or increased taxes or reduced services,” Barrineau said. “Typically, bills like this come up every year, but we can’t be lackadaisical about it.”

The S.C. Chamber of Commerce backs H. 3650, saying a simpler business license tax is necessary for companies that have operations in dozens of counties or municipalities across the state.

“Business licensing is the most business unfriendly thing we do in South Carolna,” Chamber CEO Ted Pitts said.” Right now, you have situations where some businesses are pulling 80 in 50 different rate classes.”

The bill is on the House calendar after the Labor, Commerce and Industry Committee approved it Wednesday.

Reba Hull Campbell, deputy executive director of the Municipal Association of South Carolina, said the bill could have a $300 million impact on cities across the state if approved in its current form.

“It would have a huge impact on city budgets and small businesses all across the state that compete with companies which are headquartered outside of the state,” she said.

Barrineau said he’s in favor of a streamlined business licensing process, but not one that would pull millions from local revenue streams.

“Unfortunately, what began as a noble effort has opened up into other areas,” he said. “We support the statewide standardization and streamline process for issuing business licenses. However, we do not believe tax exemptions should be included for some businesses, thereby creating unfair loopholes.”

Pitts said turning directly to property taxes as a way to make up for any potential loss of business license revenue is not likely.

“Some of our local governments have treated this tax like a revenue stream that they are going to do everything in their power to get as much money as they can. We’re not trying to put local governments out of business,” he said. “The bill changes the ways some fees are calculated but it does not say you can’t raise rates. We want to make the bill as good as possible for businesses without negatively affecting local government.”

Contact staff writer Adam Benson at 864-943-5650 or on Twitter @ABensonIJ.