Walmart was Top Contributor to LOST
Without revenues from Walmart sales, property tax relief may suffer. (Photo/Barbara Ball)
WINNSBORO (Feb. 12, 2016) – When Walmart closed its doors for the last time in Winnsboro on Jan. 28, it shut off the spigot for more than just major retail in Fairfield County. As the county’s single largest contributor to the Local Option Sales Tax – the pot of money by which Fairfield County property owners are afforded property tax relief – taxpayers may see the amount of credit they receive on future tax notices diminish.
“With the loss of that revenue (from Walmart), I don’t see how County Council is going to be able to continue to provide that relief,” said Robert Martin, who serves on the Board of Economic Advisors governing the S.C. Revenue and Fiscal Affairs Office. “I don’t see how County Council is going to get around increasing property taxes somewhat next year.”
While the S.C. Department of Revenue would not divulge exactly how much money Walmart contributed to the Local Option Sales Tax (LOST), the big-box retailer was Fairfield County’s largest contributor.
In spite of Martin’s grim forecast, Interim County Administrator Milton Pope said Fairfield County’s losses would be offset somewhat by the fact that Fairfield is a “receiver” county among the counties participating in the property tax relief formula. A portion of the penny sales tax collected by more prosperous counties – “donor” counties – is redistributed among the “receiver” counties annually.
But while funds coming back to Fairfield from donor counties might mitigate some of the fiscal damage, Martin said it would only be a fraction of what Fairfield is losing with the absence of Walmart.
“Some of it would be offset by the donor counties,” Martin said, “but I wouldn’t think it would be that much.”
Fairfield County’s municipalities are also credited with LOST funds that offset their local property taxes. According to the Department of Revenue, 33 percent of the penny tax is distributed to municipalities, based on their population. The remaining 67 percent goes to property tax relief in the unincorporated areas of the county. With the LOST funds diminished, Town council’s may have to rethink their annual budgets.
Ridgeway’s millage rate for the 2015-2016 fiscal year, for example, brought in $44,350 to their meagre general fund budget of $222,840. While Ridgeway is still bolstered by rental properties and an insurance tax, every penny counts.
Don Wood, Winnsboro’s Town Manager, said the loss of Walmart’s contribution would be “significant;” however, how significant remains to be seen. As of last week, Wood was still seeking exact figures from the Department of Revenue.
Walmart also contributed to Winnsboro’s bottom line with utility bills. According to Kathy Belton, Director of Winnsboro’s Finance Department, Walmart paid an approximate average of $23,000 a month in electricity bills, $190-$200 a month in water bills and $1,100 a month in gas bills.
All of that, too, has now dried up.
“That will certainly be a concern,” Winnsboro Mayor Roger Gaddy said. “That’s more than a quarter of a million dollars a year.”
Of course, Gaddy added, Winnsboro purchases electricity from SCE&G before reselling it to customers. So Winnsboro will only be losing its profit margin, not the entire $23,000 a month bundle.
“It will have some impact,” Gaddy said, “but I don’t think it will kill us.”
The ultimate impact of the loss of Walmart won’t be known until August, Pope said, when the final LOST figures come in. As Council begins its budgeting process in the coming months, Pope said the County will have to bear in mind the potential reduction in LOST funds when estimating property tax credits.
And while Pope was reluctant to discuss the potential for a millage increase, he did say that taxpayers would feel some impact.
“The Local Option Sales Tax is a credit on your tax bill that helps to lower taxes on property,” Pope said. “There may not necessarily be an increase, but yes, there is a possibility that folks may not see as much of a credit.”
