South Carolina General Assembly
120th Session, 2013-2014

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H. 4602

STATUS INFORMATION

General Bill
Sponsors: Reps. Stavrinakis, Gilliard, R.L. Brown, Sottile and Mack
Document Path: l:\council\bills\bh\26051dg14.docx

Introduced in the House on February 5, 2014
Introduced in the Senate on April 15, 2014
Currently residing in the Senate Committee on Finance

Summary: Education Capital Improvement Sales and Use Tax Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
    2/5/2014  House   Introduced and read first time (House Journal-page 9)
    2/5/2014  House   Referred to Committee on Ways and Means 
                        (House Journal-page 9)
    4/9/2014  House   Committee report: Favorable Ways and Means 
                        (House Journal-page 134)
   4/10/2014  House   Requests for debate-Rep(s). Whipper, RL Brown 
                        (House Journal-page 99)
   4/10/2014  House   Read second time (House Journal-page 99)
   4/10/2014  House   Roll call Yeas-79  Nays-1 (House Journal-page 100)
   4/10/2014  House   Unanimous consent for third reading on next legislative 
                        day (House Journal-page 174)
   4/10/2014          Scrivener's error corrected
   4/11/2014  House   Read third time and sent to Senate (House Journal-page 8)
   4/15/2014  Senate  Introduced and read first time (Senate Journal-page 13)
   4/15/2014  Senate  Referred to Committee on Finance (Senate Journal-page 13)

View the latest legislative information at the website

VERSIONS OF THIS BILL

2/5/2014
4/9/2014
4/10/2014

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

Indicates Matter Stricken

Indicates New Matter

COMMITTEE REPORT

April 9, 2014

H. 4602

Introduced by Reps. Stavrinakis, Gilliard, R.L. Brown, Sottile and Mack

S. Printed 4/9/14--H.    [SEC 4/10/14 5:00 PM]

Read the first time February 5, 2014.

            

THE COMMITTEE ON WAYS AND MEANS

To whom was referred a Bill (H. 4602) to amend Article 4, Chapter 10, Title 4, Code of Laws of South Carolina, 1976, relating to the Education Capital Improvements Sales and Use Tax Act, so, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass:

W. BRIAN WHITE for Committee.

            

A BILL

TO AMEND ARTICLE 4, CHAPTER 10, TITLE 4, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE EDUCATION CAPITAL IMPROVEMENTS SALES AND USE TAX ACT, SO AS TO PROVIDE THAT THE TAX MAY BE IMPOSED TO DEFRAY DEBT OBLIGATIONS OF THE SCHOOL DISTRICT AND THEREBY REDUCING PROPERTY TAXES, TO ALLOW THE REFERENDUM TO INCLUDE A SEPARATE QUESTION ON THE AUTHORIZATION OF GENERAL OBLIGATION BONDS PURSUANT TO THE CONSTITUTIONAL EXEMPTION, TO PROVIDE THE FORM OF THE QUESTION, AND TO CHANGE THE TIMING OF A REIMPOSITION REFERENDUM TO NO EARLIER THAN WITHIN THE CALENDAR YEAR WHICH IS TWO YEARS BEFORE THE CALENDAR YEAR IN WHICH THE TAX IS SCHEDULED TO TERMINATE.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Article 4, Chapter 10, Title 4 of the 1976 Code is amended to read:

"Article 4

Education Capital Improvements Sales and Use Tax Act

Section 4-10-410.    This act may be cited as the 'Education Capital Improvements Sales and Use Tax Act'.

Section 4-10-415.    For purposes of this article, the following terms and words are defined as follows:

(1)    'Area commission' means the governing body, however described, of a technical college under the jurisdiction of the State Board for Technical and Comprehensive Education which has a campus located in the county which contains the site of a capital improvement financed by revenue of the tax authorized pursuant to this article.

(2)    'School district board of trustees' means the governing body of a school district.

(3)    'County' means a county within which the sales and use tax authorized by this article is imposed.

(4)    'County auditor' means the county auditor of the county.

(5)    'County treasurer' means the county treasurer of the county.

(6)    'Debt obligations' means any general obligation bonds or bond anticipation notes issued by a school district, together with a school district's obligations with respect to installment purchase revenue bonds issued prior to January 1, 2007, and lease purchase agreements, and any obligations issued to refund or refinance any of the foregoing.

(7)    'Election authority' means the authority charged with the conduct of countywide elections within the county.

(78)    'Higher education board of trustees' means the governing body of a public institution of higher learning, other than a technical college, as defined in Section 59-103-5, which has a campus located in the county which contains the site of a capital improvement financed by revenue of the tax authorized pursuant to this article.

(89)    'Memorandum of agreement' means a written document executed by the school district board of trustees and the area commission or higher education board of trustees, or both of these entities, to provide for the school district's sharing of the revenue of the tax authorized pursuant to this article. The agreement must contain, inter alia, the revenue distribution formula expressed in percentages and the specific capital improvement projects for which the shared revenue must be used. The memorandum of agreement is not effective unless it has been ratified by a recorded vote of at least two-thirds of the membership of the school district board of trustees and a recorded vote of at least two-thirds of the membership of the area commission or higher education board of trustees, or both, as applicable. When ratified by all parties and incorporated into the resolution adopted by the school district board of trustees, the memorandum of agreement is binding on all parties.

Section 4-10-420.    (A)    Subject to the requirements of this article, there may be imposed a one percent sales and use tax within a county for specific education capital improvements for the school district or school districts listed in the referendum question as provided pursuant to Section 4-10-425(C). The revenues collected pursuant to this article also may be used to defray debt service on bonds issued to pay for education capital improvements listed in the referendum question and to reduce property taxes needed to pay debt obligations of the school district. Pursuant to a memorandum of agreement, a portion of the revenue of the tax may be shared with and distributed to the area commission or higher education board of trustees, or both such governing bodies for specific education capital improvements on the campus or campuses of the recipient governing body located in the county as listed in the referendum question pursuant to Section 4-10-425(C). The proceeds of the tax must be distributed as provided in this article. The boards of trustees of the school districts, in the resolution adopted pursuant to Section 4-10-425, shall provide specific capital improvement projects for which the proceeds of the tax distributed to those school districts must be expended and, if applicable, shall provide that proceeds of the tax also may be used to reduce property taxes levied for the payment of debt obligations of the school district. Where an area commission or higher education board of trustees shares in the revenues, the resolution must incorporate the memorandum of agreement.

A school district board of trustees shall use the school district's share of the distribution only to pay for those capital improvements provided in the resolution and included in the referendum question directly, or to service general obligation debt incurred by the districts for such improvements, or a combination of these purposes and, if provided for in the resolution and referendum question, to pay debt obligations of the school district in order to reduce property taxes levied for the payment of such debt obligations.

An area commission or higher education board of trustees, or both, shall use its share of the distribution only to pay for its capital improvements provided in the memorandum of agreement and included in the referendum question directly, or to replace tuition revenues pledged to service state institution bonds issued for such improvements, for some other applicable method of financing capital improvements provided by law, or a combination of these purposes. If any necessary approvals required by law for the issuing of state institution bonds or other method of financing are not forthcoming, the area commission and higher education board of trustees, as appropriate, shall then use the revenue for the projects approved to the extent possible and may prioritize among their projects for their completion.

(B)(1)    The tax allowed by this article may not be imposed in a county in which there is currently imposed or scheduled to be imposed a local sales and use tax for public school capital improvements authorized pursuant to any local law enacted by the General Assembly.

(2)    Notwithstanding any other provision of law, a local sales and use tax for public school capital improvements authorized by a local law enacted by the General Assembly may not be imposed in a county while the tax authorized pursuant to this article is imposed in that county.

Section 4-10-425.        (A)    The tax authorized by this article may be imposed in the county upon the adoption of an approving resolution by the board of trustees of a school district, and the subsequent approval of the imposition of the tax by referendum open to all qualified electors residing in the county in which the question includes each specific education capital improvement included in the resolution and any incorporated memorandum of agreement and, if provided for in the resolution, a statement that proceeds of the tax also may be used for the payment of debt obligations of the school district in order to reduce property taxes levied for the payment of such debt obligations. The referendum also may include a separate question on the authorization of general obligation bonds to fund the capital improvements listed in the referendum under the exemption provided in Section 15(5), Article X of the Constitution of South Carolina, 1895.

The approving resolution must specify some period, stated in calendar years, not to exceed fifteen years, for which the tax must be imposed, the date of the referendum, and the question to appear on the referendum ballot. If the board of trustees proposes to include a separate question on the authorization of general obligation bonds, the approving resolution must specify the maximum amount of bonds to be issued and the maximum term of the bonds. The approving resolution, upon adoption, must be forwarded to the election authority. The referendum required by this article may only be conducted in even-numbered years at the time of the general election.

(B)    Upon receipt of a resolution from the board of trustees of a school district, the election authority shall conduct a referendum on the question of imposing the tax in the county. Notice of the election must be provided in the manner provided by the general election law and include the question to be voted upon in the referendum. Expenses of the referendum must be paid by the school district or school districts for which the referendum is being held.

(C)(1)    The ballot to be voted upon in the referendum must read substantially as follows:

EDUCATION CAPITAL IMPROVEMENTS SALES AND USE TAX ACT REFERENDUM FOR ____________ COUNTY

Must a special one percent sales and use tax be imposed in _____ County for not more than ____ years with the revenue of the tax used to pay, directly or indirectly, the cost of the following education capital improvement projects in _____________ County

(1)    _____________

(2)    _____________ etc.?

Yes    []

No    []

Those voting in favor of the question shall deposit a ballot with a check or cross mark in the square after the word 'Yes', and those voting against the question shall deposit a ballot with a check or cross mark in the square after the word 'No'.

The ballot may contain a short explanation of the question to be voted upon in this referendum.

(2)    If the resolution adopted by the board of trustees provides that proceeds of the sales and use tax also may be used to pay debt obligations of the school district in order to reduce property taxes levied for the payment of such debt obligations, then the ballot question in item (1) also must contain 'and to pay debt obligations of the school district in order to reduce property taxes levied for the payment of such debt obligations'.

(3)    In addition, the referendum, as determined by the board of trustees of a school district, may contain a separate optional question on the authorization of general obligation bonds to fund the capital improvements listed in the referendum under the exemption provided in Section 15(5), Article X of the Constitution of South Carolina, 1895, so that revenues derived from the imposition of the sales and use tax may be used to pay debt service on the bonds. The additional question must read substantially as follows:

If the sales and use tax described in the preceding question is approved, shall _________ School District, South Carolina, be authorized to issue and sell, either as a single issue or as several issues, general obligation bonds of ________ School District, South Carolina, in the principal amount not exceeding $___________ and maturing over a period not to exceed ________ years to fund the education capital improvements described above?

Yes    []

No    []

Those voting in favor of the question shall deposit a ballot with a check or cross mark in the square after the word 'Yes', and those voting against the question shall deposit a ballot with a check or cross mark in the square after the word 'No'.

The ballot may contain a short explanation of the question to be voted upon in this referendum.

(D)    Upon receipt and certification of the returns of the referendum, the election authority shall by resolution certify the results of the referendum by resolution and within ten days thereafter file the resolution with the clerk of court for the county and with the South Carolina Department of Revenue. The result of the referendum, as declared by resolution of the election authority and as filed with the clerk of court, is not open to question except by a civil action instituted in the county within twenty days of the filing of the resolution. If a majority of the total votes cast is in favor of imposing the tax, then the tax is imposed as provided in this section; otherwise the tax is not imposed. If the question on the imposition of the tax is approved, the tax will be imposed for the applicable period stated in the question regardless of whether the question relating to the issuance of general obligation bonds, if any, is approved.

Section 4-10-430.    (A)    If the tax is approved in the referendum, the tax must be imposed beginning upon the first day of the fourth full month following the filing of the declaration of results of the referendum with the Department of Revenue.

(B)    The tax terminates upon the earlier of:

(1)    the final day of the maximum time specified for the imposition; or

(2)    sixty days following the filing with the Department of Revenue of certified copies of a resolution adopted by the board of trustees of the school district requesting termination of the tax. Where revenues of the tax are shared pursuant to a memorandum of agreement as provided pursuant to Section 4-10-420, the termination resolution must be adopted by all parties to the memorandum of agreement.

Section 4-10-435.    (A)    The tax levied pursuant to this article must be administered and collected by the Department of Revenue in the same manner that other sales and use taxes are collected. The Department of Revenue may prescribe the amounts which may be added to the sales price because of the tax.

(B)    The tax authorized by this article is in addition to all other local sales and use taxes and applies to the gross proceeds of the sales in the county which are subject to the tax imposed by Chapter 36, of Title 12 and the enforcement provisions of Chapter 54, of Title 12. The gross proceeds of the sale of items subject to a maximum tax in Chapter 36, of Title 12 are exempt from the tax imposed by this article. The gross proceeds of the sale of unprepared food items which may lawfully be purchased with United States Department of Agriculture food coupons are exempt from the tax imposed by this article. The tax imposed by this article also applies to tangible personal property subject to the use tax in Chapter 36, of Title 12.

(C)    Taxpayers required to remit use taxes under Chapter 36, of Title 12 shall identify the county in which the tangible personal property purchased at retail is stored, used, or consumed in this State.

(D)    Utilities are required to report sales in the county in which consumption of the tangible personal property occurs.

(E)    A taxpayer subject to the tax imposed by Section 12-36-920 who owns or manages rental units in more than one county shall separately report in his sales tax return the total gross proceeds from business done in each county.

(F)    The gross proceeds of sales of tangible personal property delivered after the imposition date of the tax levied under this article in the county, either under the terms of a construction contract executed before the imposition date, or a written bid submitted before the imposition date, culminating in a construction contract entered into before or after the imposition date, are exempt from the special local sales and use tax provided in this section if a verified copy of the contract is filed with the Department of Revenue within six months after the imposition of the special local sales and use tax.

(G)    Notwithstanding the imposition date of the sales and use tax authorized pursuant to this article, with respect to services that are regularly billed on a monthly basis, the sales and use tax is imposed beginning on the first day of the billing period beginning on or after the imposition date.

Section 4-10-440.    (A)    The revenues of the sales and use tax collected under this article must be remitted to the State Treasurer and credited to a fund separate and distinct from the general fund of the State. If revenue of the tax is shared, the school district shall forward a certified copy of the resolution and an incorporated memorandum of agreement to the State Treasurer. After deducting the amount of refunds made and costs to the Department of Revenue of administering the tax, not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues monthly as provided pursuant to subsection (B) of this section. The State Treasurer may correct misallocation costs or refunds by adjusting proportionately subsequent distributions, but these adjustments must be made in the same fiscal year as the misallocation.

(B)    The State Treasurer shall distribute proceeds of the tax due the school district to the county treasurer for the benefit of the school district. If revenues are shared, any revenue due the area commission or higher education board of trustees, or both of these entities, must be distributed by the State Treasurer monthly to approved accounts of those entities. All such distributions must be proportionately reduced by amounts attributable to refunds and administration as provided pursuant to subsection (A) of this section.

(C)    Except as provided in Section 4-10-445, withdrawals by a school district of tax proceeds from the county treasurer must be made in the same manner as are funds appropriated to the school districts by the State. Pending these withdrawals, taxes must be deposited in an account for the school district, separate and distinct from accounts established for any other purpose, and investment earnings derived from monies in such an account must be credited to the account. The school district shall maintain records which demonstrate that tax proceeds are spent only for the purposes as approved by its board of trustees and in accordance with this article.

(D)    The proceeds of the sales and use tax paid to the county treasurer for the benefit of a school district must be applied only for the purposes set forth in the resolution adopted pursuant to Section 4-10-425.

Section 4-10-445.    (A)    If a school district has provided in its resolution adopted pursuant to Section 4-10-425, that any portion of the proceeds of the sales and use tax allocated to it must be applied to debt service on general obligation bonds issued to fund the capital improvements listed in the referendum or to pay debt obligations of the school district in order to reduce property taxes levied for the payment of such debt obligations, the school district shall notify the county treasurer in writing no later than the first day of August of each year of the amount of sales and use taxes to be applied to offset the debt service millage levy for such general obligation bonds or other debt obligations of the school district. The amount so specified must not exceed the amount of sales and use tax proceeds held by the county treasurer for the school district as of the June thirtieth immediately preceding such first day of August. The notice applies only to debt service payments or payment of debt obligations to be made in the eighteen-month period following that June thirtieth.

Upon receipt of notice from a school district pursuant to this section, the county treasurer shall certify to the county auditor, by the fifteenth day of August of the amount of sales and use taxes designated by the school district for application to general obligation bond debt service payments or payment of other debt obligations of the school district. The county auditor shall reduce the next levy of property taxes required to pay debt service on such general obligation bonds or other debt obligations of the school district by the amount of sales and use tax revenues certified as held by the county treasurer and designated by the school district for the purpose. This amount of sales and use taxes thereafter must not be released to the school district, but must be held by the county treasurer to pay debt service on general obligation bonds or other debt obligations of the school district. However, any sales and use taxes held by the county treasurer in excess of the amounts designated by the school district for payment of debt service on such general obligation bonds or other debt obligations of the school district must be expended as directed by the school district in accordance with this article. Any investment earnings derived from the sales and use tax must be expended as directed by the school district in accordance with this article. Any sales and use taxes allocated to a school district and not required to accomplish the purposes described in the resolution of the school district adopted pursuant to Section 4-10-425 may be applied to debt service on any general obligation bonds of the school district.

(B)    If the school district presents the county treasurer with a surety bond or letter of credit from a financial institution which is rated in one of the two highest rating categories by two national ratings agencies, the county treasurer may treat the amount available under such surety as if it were taxes held by the county treasurer and shall provide the certificate called for in the foregoing paragraph to the auditor by including the amount available under the surety or letter of credit so long as such amount is not in excess of ninety percent of the actual sales and use taxes allocated to the school district in the prior fiscal year, or which would have been allocated if the sales and use tax had been in force for all of the prior fiscal year. The county auditor shall reduce the next levy of ad valorem property taxes required to pay debt service on bonds or other debt obligations of the school district to which the tax is applicable by the amount so certified by the county treasurer. If the sales and use taxes thereafter allocated to the school district are less than the amount required to pay debt service on bonds or other debt obligations of the school district during the eighteen-month period established in Section 4-10-445(A), the county treasurer shall draw upon the surety to provide for timely payment of such general obligation bonds or other debt obligations of the school district. The costs of such surety, including any reimbursements for payments thereon, are deemed to be part of the debt service requirements for such general obligation bonds or other debt obligations of the school district covered by such surety and may be paid from amounts available in the fund created in accordance with Section 4-10-445(A). Any reimbursement to the financial institution providing such surety may be paid from the fund from taxes collected in the year after any draw.

Section 4-10-450.    The Department of Revenue shall furnish data to the State Treasurer and to a school district and others receiving tax revenues pursuant to this article for the purpose of calculating distributions and estimating revenues. The information which must be supplied to the school district upon request includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240.

Section 4-10-460.    The tax authorized in this article may be renewed and imposed within a county in the same manner as proceedings for the initial imposition of the tax. A referendum on the question of reimposition of a tax must not be held more earlier than within the calendar year which is two years before the date upon calendar year in which the tax then in effect is scheduled to terminate, but any reimposition is effective immediately upon the termination of the tax previously imposed.

Section 4-10-470.    The Education Capital Improvements Sales and Use Tax authorized by this article may only be imposed in counties which have collected at least seven million dollars in state accommodations taxes as imposed pursuant to Section 12-36-920(A) in the most recent fiscal year for which full collection figures are available. Once a county meets this threshold it thereafter remains eligible to impose this tax."

SECTION    2.    This act takes effect upon approval by the Governor.

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