Each year, the SC Revenue and Fiscal Affairs Office releases updated figures to direct municipal audit requirements and millage rate increases allowable under state law.
Audit thresholds
South Carolina law, under SC Code Section 5-7-240, historically required all municipalities to submit audits to the state treasurer after each financial year. Acknowledging the costs associated with audits, the General Assembly passed Act 71 in 2023, allowing certain cities and towns with revenues below a set amount the option of providing a compilation of financial statements instead of a full audit.
To be eligible to do this, the municipality’s total recurring revenues must fall below a threshold established in the Act and updated annually by the SC RFA. RFA adjusts the threshold each year based on the consumer price index. For fiscal years beginning after January 1, 2026, RFA has determined that the threshold will increase to $528,292. Municipalities with recurring revenues above this threshold are required by law to submit a full audit.
Additional information about required financial reporting is available on the Municipal Association’s webpage, “Municipal Audits: Understanding Act 71,” as well as on the State Treasurer’s Office website.
Millage rate increases
Under Act 388 of 2006, municipalities may raise their millage rate only according to the consumer price index and the municipality’s increase in population, if any.
The millage rate increase limitation for FY 2026–27 includes a 2.63% inflation factor, which will be used in calculating allowable millage increases. Final limits for all municipalities will be published by RFA following the release of updated population data, anticipated in May 2026. The calculated municipal millage caps will then be published on the Municipal Association’s website.
Those with questions about audit thresholds or millage rate increases should contact their Municipal Association Field Services managers.