S.C. counties and cities told to carefully review user fees

GREENVILLE, S.C. (AP) — Organizations representing local governments in South Carolina plan to ask lawmakers to broaden the definition of fees they use to raise money for items like road maintenance after a state Supreme Court ruling suggested some of the fees are not legal.
In the meantime, those organizations are also recommending governments review their fees in light of last month’s high court decision that tossed out two fees in Greenville County. Justices ruled they were taxes that must get legislative approval.
Many of the fees charged by cities and counties for fire protection, public works and stormwater drainage appear to be OK under the ruling, Scott Slatton with the Municipal Association of South Carolina told The Post and Courier.
“Many, if not most, of the fees for services municipalities levy are going to be compliant,” Slatton said.
One of the fees rejected by the court was Greenville County’s road fee, which many other local governments also charge.
User fees under state law have to apply directly to those who pay it, the state Supreme Court justices wrote in the June 30 ruling.
Road fees also benefit the public at large and people who don’t pay the fee, defining them as a tax under state law, which can’t be levied without the General Assembly’s permission, the justices ruled.
Other user fees, like for fire protection or public works, would likely pass a judicial review because they directly benefit the people paying the fee through lower insurance rates or better sewer lines, said Joshua Rhodes, deputy executive director of the South Carolina Association of Counties.
Rhodes’s group plans to ask lawmakers in 2022 to change the law so road fees aren’t considered taxes. Dozens of counties and cities use the money to pay to build, fix and maintain roads that aren’t covered by the state.
But they will be asking some of the people who sued over the fees in the first place. The South Carolina Supreme Court case was won by three Greenville County legislators.
One of them said he will consider whatever bill is proposed but is leery about broadening the definition of fees that citizens can be charged without legislative oversight.
“I think that would open up a door that would be impossible to close later,” said Rep. Garry Smith, a Republican from Simpsonville.
What concerns local governments the most isn’t the main opinion by the justices, but a concurring opinion by Associate Justice John Kittredge, who wrote he understands local governments want to call the methods they use to raise revenue fees instead of taxes, but the courts can’t tolerate letting them circumvent state law.
“I believe today’s decision sends a clear message that the courts will not uphold taxes masquerading as ‘service or user fees,'” Kittredge wrote in his June 30 opinion.