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Bringing Predictability Back to the Local Government Fund

Veterans of local government have probably heard the story too many times: the Local Government Fund is not fully funded as required by state law. This has been the case since 2009 when the General Assembly froze funding during the Great Recession.

Local Government Fund graph

Each year since then, the Municipal Association of South Carolina has asked the General Assembly to fully fund the LGF. The Association's 2019 Advocacy Initiatives, however, take a different approach. Rather than requesting full funding for the LGF, the Association is seeking a new formula that is fair and consistent for cities and towns of all sizes.

This initiative connects back to the creation of the the fund in 1991, which simplified the system of distributing funds from the complicated and unpredictable funding for local governments that existed until that time. Once it went into effect, the fund provided stability for nearly two decades. That dynamic changed in the aftermath of Great Recession in the 2008 – 2012 period. As was the original intention for the LGF, when state revenues went down, so did its funding.

The economic impacts of the recession have faded in the years since, but the funding turbulence never has. The percentage at which the LGF is funded has shifted every year for the past decade, ranging as high as 94 percent in FY 2009 and as low as 65 percent in FY 2019. This kind of chaos leaves cities and towns unable to make plans for their distributions since the amount cities will receive remains uncertain until the General Assembly passes its budget in May or June.

Local officials can help the Municipal Association legislative staff inform legislators about how cities use their LGF dollars by picking one thing that uses this funding, then addressing how that funding impacts residents and local businesses every day, and what could change if the city had a more dependable level of funding.

    Other 2019 Advocacy Initiatives
    The Municipal Association's Advocacy Initiatives arise from feedback received during Regional Advocacy Meetings. The Municipal Association's legislative committee and board of directors then approve the initiatives. There are three initiatives for 2019. In addition to updating the Local Government Fund, the Municipal Association has identified these:

  • Expand flexibility for using accommodations and hospitality taxes to allow expenditures for infrastructure and law enforcement in tourist-related areas.   
  • Reduce the wait time for local law enforcement hires to be admitted to the Criminal Justice Academy.

The Local Government Fund, along with the other advocacy initiatives, will be discussed at Hometown Legislative Action Day on February 5.