Originally created 05/06/04

Penny-tax formula is inaccurate

AIKEN - Officials have discovered a crucial flaw in the formula used to distribute money from a 1-cent sales tax Aiken County voters will be asked to renew in November, raising questions about how a projected $100 million in fresh cash will be divided.

Sales tax data from 2003 inaccurately list the location of an unknown number of Aiken County businesses, placing some Aiken or North Augusta enterprises in the county and putting others that do business in the county within city limits. In one instance, the South Carolina Department of Revenue records listed a Wagener business within the city of Aiken.

Clearing up these discrepancies is critical to even distribution of the money among the county government and 11 cities. A committee drafting the sales tax referendum is calculating the share for each government entity based on the formula used to distribute money from the first round of the tax voters approved in a 2000 referendum.

Under those guidelines, half of what a city got was based on population and the other half was based on its sales tax revenue. The second part of the formula favors the county and its two largest cities, North Augusta and Aiken, which account for more than 90 percent of sales in Aiken County.

Inaccuracies in the sales tax data could shortchange some jurisdictions and give others an extra jolt of money, officials said.

"If that turns out to be a real problem, it can probably be fine-tuned," said Wade Brodie, a member of the six-person committee drafting the referendum.

Officials said Wednesday that they're not sure how many of the 2,993 businesses in the county or its 11 cities are misidentified, or how long it will take to sort out.

The mistakes were noticed because sales tax data showed disproportionate revenue decreases for the city of North Augusta and the county between 1998 and 2003, officials said.

The county's portion of sales tax revenue dropped from 45 percent to 40 percent, while North Augusta's declined from 19.5 percent to 17 percent, according to state revenue figures, Aiken County Administrator Clay Killian said. The city of Aiken, meanwhile, saw its revenue jump from 33 percent to 40 percent.

North Augusta Finance Director John Potter Jr. said he thought he had identified businesses from his city that were mislabeled. He said it appears that every business in the county was accounted for but that some were placed in the wrong jurisdiction.

That would mean the overall estimates that show the renewed tax bringing in between $90 million and $100 million are accurate.

Reach Josh Gelinas at (803)279-6895 or josh.gelinas@augustachronicle.com.

A committee attempting to evenly divide $100 million from a proposed renewal of a 1-cent sales tax will draft a referendum that will go before Aiken County voters in November.


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