Lexington County taxpayers could be hit with several tax increases next year

Lexington County residents may see their tax bills go up next year.

As local governments set their budgets for 2023-24, both Lexington County Council and at least two of the area’s school districts — Lexington 1 and Lexington-Richland 5 — are considering increasing tax rates for the fiscal year that begins July 1.

On April 25, Lexington County Administrator Lynn Sturkie presented the county council with what he called the “most difficult budget I’ve ever had to produce.”

That budget calls for a tax increase of $19.69 for a home valued at $100,000. For a home that is not the owner’s primary residence, the rate would rise by $29.53.

Sturkie attributed the need for a tax adjustment to the same rising costs bedeviling much of the U.S. economy. In Lexington County’s case, that adds up to a projected budget need of $182 million beginning July 1, with expected revenues without a tax increase of only $176 million.

On top of a mandated 1% increase in the county’s retirement system, Sturkie also requested the council approve a 7% cost of living adjustment and a 3% merit pay increase for county employees.

“We’re playing catch-up with our employees and their salaries,” Sturkie said. “There were years our employees did not receive an increase at all. We have a tremendous amount of vacancies. It’s a competitive market.”

The county isn’t the only entity considering a tax increase this year. The Lexington 1 school district has already revised up its expected tax rate for the next school year.

The central Lexington County school district was initially considering an increase of 7 mills, which would generate a $2.4 million increase in revenue. That’s a $42 increase in taxes on a $100,000 property, and $13 in vehicle taxes on a $30,000 car in the district.

But at its May 16 meeting, the Lexington 1 school board agreed to nearly triple that total, to 20 mills — or $120 on a $100,000 property and $37 in vehicle taxes.

The increase won’t apply to most residences because South Carolinians who own their own homes don’t pay residential property taxes for school operations.

Lexington 1 Chief Financial Officer Jennifer Miller warned school board members at a meeting last month that rising costs, combined with the winding down of COVID-era emergency relief, could require even higher tax rate increases in the future.

“We haven’t raised taxes, and we’ve been kicking the can down the road, and this is the position we’re in now,” Miller said.

The district faces a $34 million increase in operating expenditures for the next school year, which means Lexington 1 needs to raise some $6 million more from local taxpayers even after a more than $15 million boost in state funding, an additional $5 million transferred from other funds and a more than $7 million increase in the fund balance from last year, Miller told board members.

“We have not been able in our funding, our revenue, to keep up with growth and inflation, and we’re feeling that pinch now,” board chair Anne Marie Green said. “It is painful and nobody wants to raise millage ever, but what to me it is saying is that the value of our community has increased over the last few years, so we are eligible to tap into that value at a level that corresponds to the growth in the community.”

The budget calls for starting teacher salaries to increase by $2,500 next year to $43,910.

The last time Lexington 1 raised taxes was 2019, when the rate went up 4.45 mills.

Board member Chris Rice suggested the district could employ an outside auditor to examine its budgeting before it considers any more possible changes to the district’s tax rate.

“It’s going to be hard to go back a second or third time asking for more if we can’t verify what we’ve laid out here,” Rice said.

In Lexington-Richland 5, which covers the Chapin-Irmo area, the school district is considering its own increase of $179 a year for a $150,000 property, or $36 for a $30,000 car.

Board member Catherine Huddle said she would oppose any millage increase, in part citing Lexington County’s plans to increase property taxes on top of whatever the school districts do. Once a tax goes up, Huddle said, “it almost never goes down.”

Board member Kevin Scully said the district has to keep pace with rising costs to maintain the level of excellence the district has become known for.

“This is not a fun conversation to have, but in order to stay competitive, we have to constantly invest,” Scully said. “If we stop investing in ourselves and our community, we start falling behind.”

Superintendent Akil Ross warned that “rolling costs” will eat away any increase in state funding the district receives, and the administration could have to make hard choices next year without any increase in revenue.

“We need direction on where that’s going to come from,” Ross told the board. “This is no scare tactic, this is the math.”

None of the public bodies have finished adopting their budgets — and the tax rates to go along with them — for the 2023-24 fiscal year, but must complete the process before the new budget year begins July 1.

Lexington County Council already held a specially-called budget hearing on May 16, at which no members of the public spoke. After Sturkie gave a presentation on the budget, the meeting was adjourned after six minutes.