County government budgeting and finance are complex processes that involve a number of key actors and detailed procedures. Who prepares the county budget is a key element in the overall budget process. Budget preparation authority is located with different positions of units, depending on the form of county government.
Four other county officials are key factors in the budget process. These officials are the Finance Director, Auditor, Treasurer, and Assessor. Many counties employ a Finance Director, who is hired by county council to establish and maintain county financial records, a payroll and purchasing system, and to perform other related duties. The auditor is the elected official (except in the Council-Manager form of government) who is responsible for calculating property taxes and sending out tax notices. The county treasurer, also an elected official, (except in the Council-Manager form of government) is responsible for collecting county taxes, issuing checks, and investing idle cash. The assessor is hired by county council and is responsible for assessing the value of property for property tax purpose.
Prior to the passage of the Local Government Law, counties budgeted based on legislative supply bills. The supply bill is a term used to describe the General Assembly's appropriations to the county through the local legislative delegation. The Local Government Law required that all South Carolina counties prepare and adopt an annual budget that reflects income adequate to meet anticipated expenses. Counties must hold public hearings before adopting operating or capital budgets, and the budget must be formally adopted at a public meeting. This public budgeting process contrasts sharply with the old legislative supply bill process which did not provide for public input since approval would already have been obtained through the county's council and legislative delegation.
The South Carolina Code of Laws sets out the statutory requirements for county budgeting in sections 4-9 through 4-9-440. The following statutes are most significant:
The county fiscal or budget year is set as July 1 through June 30. County council must adopt capital and operating budgets before the fiscal year begins. Operating and capital budges must identify all revenue sources and council must provide for the levying and collecting of taxes necessary for budget obligations. Council may make supplemental budget appropriations by following the same procedures used to adopt operating and capital budgets. Council may require any county department of agency to provide financial reports, estimates, or statistics concerning the fiscal condition of the department or agency.
There are four major revenue sources for South Carolina's counties. These major sources and the approximate percentage that each source represents is in the following table.
Of the revenue sources identified, counties control only property taxes, which can be increased or decreased locally, and fees, including user charges, fines, and interest on idle funds, which can be controlled at the county level. Counties exercise little or no control over the amount of state of federal revenues they receive.
State-shared revenues for counties are made available through the General Assembly under the budget category of Aid to Subdivisions. State collected revenues are distributed to both counties and cities on a formula basis. Examples of shared revenues with counties are the alcoholic liquor tax, the beer tax, and various others. As a general rule, state-shared revenues can be calculated to be approximately $20 per capita.
Of the locally controlled revenues, the property tax is the most important for most South Carolina counties. In South Carolina, all owner-occupied residences are assessed a property tax based upon four percent of their fair market value. Other residences are assessed at six percent, agricultural property at four percent, and so on. The assess ratio (percentage) is multiplied by the fair market value of the property to obtain an assessed value. The assessed value is then multiplied by the tax rate, usually expressed as tax millage. Counties then levy ordinary county millage to finance general county operations. School districts and special purpose districts in the county have separate tax millage rates established to support their operations. School millage taxes are normally collected by the county and turned over to the school districts. The county tax assessor's office is responsible for assessing all residential, agricultural, and commercial property in the county. The South Carolina Tax Commission assesses all manufacturing property, business personal property, utilities and railroad property.
Many county government expenditures represent extensions of state government at the local level. State mandated expenditures include those for public education, the court system, social and health services, land and property record keeping, tax assessment, and elections. In some instances counties receive little of no compensation for providing theses state required services and functions. By statutory requirement, custom or tradition, counties are expected to provide financial support for:
Judicial costs including, a court house, employee salaries, operational costs, and purchasing for courts. Building equipment and utility costs for certain state agency operations that staff county-level offices i.e., County Department of Social Services, County Department of Health and Environmental Control (County Health Department). Building and equipment costs for Technical Education Centers. Tax Administration, including costs associated with tax assessment and collection. Penal facilities, specifically the maintenance of a jail.
Debt service represents another significant expenditure category. Counties can borrow money under certain statutory restrictions and may include the cost of debt repayment as a major expenditure item in a county's budget. For many counties, debt service represents 10-25 percent of all general fund expenditures.
The county general fund budget actually represents only about 20-30 percent of the county's total expenditures. The general fund budget includes the most visible and familiar county services; tax assessment and collection, health and social services, public works, law enforcement, council operations, county administrator, and the judiciary system. Approximately 60-70 percent of a typical county's property tax collections are devoted to public education expenditures, including school bonds.