Hospitality Ass'n of South Carolina, Inc. v. County of Charleston

Finney, Justice:

I respectfully dissent. In my opinion, all three ordinances at *231issue here are invalid because they are not authorized by statute.

These ordinances were enacted by the defendant local governments pursuant to their statutory authority to impose uniform service charges under S.C. Code Ann. § 4-9-30(5)(a) (county statute) and § 5-7-30 (municipal statute) (1986 and Supp. 1994), and the plaintiffs challenge the lawfulness of these service charges. The majority never addresses this issue, but instead decides this case on grounds never contemplated by the parties. In so doing, they reinterpret certain Home Rule statutes to effectuate a wholesale transfer of the taxing power from the General Assembly to local government. Under the majority’s decision today, each political subdivision is free to impose virtually any tax which it wishes, from income tax to sales tax to excise tax. Not only is this sua sponte decision an unwarranted deviation from our usual procedural rules, more importantly, it represents an unprecedented rewriting of history and of the South Carolina Constitution.

This case requires that we revisit the issue of the power and authority of local governments to enact local laws. I agree with the majority that local governments may act only where a statute gives them the power to act. I disagree with their conclusions that broad language in statutes which endow these entities with their “police powers” somehow empower local governments to act as they wish, so long as their acts do not conflict with either the Constitution or the general law. There is no precedent for such a sweeping reading of these rather routine statutes, a reading which renders superfluous every other statute which contains a specific delegation of a governmental power.

The Home Rule Amendments mandate that the General Assembly provide by general law the powers of counties and municipalities. S.C. Const. art. VIII, § 7 (counties); the majority, these ordinances are invalid as they are inconsistent with the general law. Furthermore, although I strongly believe these ordinances levy what is in reality a tax, this determination is not necessary to the disposition of this case.

Section 4-9-25 provides that all counties “have authority to enact regulations, resolutions, and ordinances, not inconsistent with the Constitution and general law of this State. . . .” Similarly, § 5-7-30 provides each municipality “may enact reg*232ulations, resolutions, and ordinances, not inconsistent with the Constitution and general laws of this State. ...” The ordinances in this case are inconsistent with the general law.

An ordinance is improper and void if it conflicts with the general law of the state on a matter of statewide concern or application. Town of Hilton Head Island v. Coalition of Expressway Opponents, 307 S.C. 449, 415 S.E. (2d) 801 (1992). A court is to examine the entire field on the subject as well as the ordinance itself to determine if it is inconsistent with state law. See Town of Hilton Head Island v. Fine Liquors, Ltd., 302 S.C. 550, 397 S.E. (2d) 662 (1990); McAbee v. Southern Rwy. Co., 166 S.C. 166, 164 S.E. 444 (1932). Furthermore, “each particular case must be determined as it arises.” McAbee, 166 S.C. at 172, 164 S.E. 444. Here, these ordinances are in conflict with the Local Option Sales Tax1 (LOST) and the State Accommodations Tax.2

All three ordinances conflict with the LOST. The LOST provides for a general statewide scheme through which counties can levy an additional sales and use tax of one percent. Like the LOST, the charges levied by these ordinances are due and payable at the time of the sale. The charge is calculated as a percentage of the retail sales price and collected by the seller.3

The General Assembly required among other things that a county hold a referendum before it can impose the LOST. The General Assembly limited the LOST to one percent and provided the manner in which the proceeds are to be handled. Further, the General Assembly limited the power to levy a LOST to only counties. The General Assembly also restricted the amount of proceeds which each county can receive and required the funds be used to roll back property taxes. A county would have no incentive to follow the more rigorous and limiting procedure set forth by the General Assembly if it could simply impose a service charge of a higher percentage upon a limited number of commodities raising greater proceeds to be used as it deems fit.

*233The City of Charleston has levied its service charge only upon food and beverages in those establishments with an on-premise beer and wine license. Simply by narrowing those commodities upon which the charge is levied, the City of Charleston should not be allowed to circumvent the General Assembly’s mandate. To permit local governments to impose a charge upon a limited number of commonly used commodities rather than, or in addition to, the state-authorized LOST would defeat the taxing scheme established by the General Assembly and render these statutes meaningless. Further, the LOST legislation would be unnecessary, a result which could not have been intended by the Legislature. See Graham v. State, 109 S.C. 301, 96 S.E. 138 (1918) (it is presumed the legislature will not do a futile thing).

Further, the charges imposed by the Charleston County and the Town of Hilton Head ordinances are inconsistent with the State Accommodations Tax. These ordinances closely track the State Accommodations Tax in form and substance. For example, the Charleston County ordinance defines “accommodations” in substantially the same language as in S.C. Code Ann. § 12-36-920 (Supp. 1994).

These local governments can not circumvent the statutory limitations placed upon delegation of the State’s ad valorem property tax power, must relate to the ownership of real or personal property.4 Since neither the Town’s service charge on rentals nor the City’s charge on restaurant bills is a charge related to the ownership of real or personal property, I find them invalid.

The relevant statute delegating the General Assembly’s property taxing power to the County pursuant to art. X, § 6 is § 4-9-30(5)(a), which gives county governments the power:

to assess property and levy ad valorem property taxes and uniform service charges, including the power to tax different areas at different rates related to the nature and level of governmental services provided and make appropriations for functions and operations of the county, including, but not limited to, appropriations for general public works, including roads, drainage, street lighting, *234and other public works; water treatment and distribution; sewage collection and treatment; courts and criminal justice administration; correctional institutions; public health; social services; transportation; planning; economic development; recreation; public safety, including police and fire protection, disaster preparedness, regulatory code enforcement; hospital and medical care; sanitation, including solid waste collection and disposal; elections; libraries; and to provide for the regulation and enforcement of the above____(Emphasis added.)

This subsection of § 4-9-30, like § 5-7-30, gives counties three powers with regard to property: (1) the authority to make assessments; (2) to levy ad valorem taxes; and (8) to impose uniform service charges. The funds generated under this statute must be used for the functions and operations of the county. That “uniform service charges” must relate to the ownership of real or personal property is apparent from the language of § 4-9-30(5)(a) itself and from art. X, § 6. See also Ex parte Yeargin, supra. While the language of § 4-9-30(5)(a) is not as explicit as that of § 5-7-30, the purposes of the § 4-9-30 and § 5-7-30 are identical, that is, to delineate the specific powers given to local governments. In both statutes the term “uniform service charges” is used only in conjunction with the power of local government to impose property-related charges, a power derived from art. X, § 6. It is unreasonable to believe the legislature intended the term “uniform service charge” to have one meaning under § 5-7-30 and a different meaning under § 4-9-30(5)(a). Uniform service charges must be based upon the ownership of real or personal property, and are not an independent source of revenue raising. See also Brown v. Horry County, supra (approving uniform service charge on personal property in the county).

The Charleston County ordinance imposing a 2% fee on bills for short-term rentals is not a uniform service charge based upon the ownership of real or personal property, and is therefore invalid because it is not authorized by § 4-9-30(5)(a).

As presently written, §§ 4-9-30 and 5-7-30 allow local governments to impose uniform service charges only when those charges are based upon the ownership of real or personal property. I do not suggest that the General Assembly could not give local governments the power to impose other types of *235taxes, for example on sales,5 or to authorize charges based not on property but on individuals6 or transactions such as those at issue here, but rather would hold it has not done so in § 4-9-30(5)(a) or § 5-7-30. Accordingly, I would hold the ordinances at issue here invalid.

S.C. Code Ann. § 4-10-10 et seq. (Supp. 1994).

S.C. Code Ann. § 12-36-920 (Supp. 1994).

In addition, these ordinances impose charges closely akin to the general statewide sales tax. S.C. Code Ann. § 12-36-5 et seq. (Supp. 1994). The only significant difference is the ordinances impose charges on only a limited number of commodities (hotel rooms, food, and beverages).

I would overrule Williams v. Town of Hilton Head, 311 S.C. 417, 429 S.E. (2d) 802 (1993) to the extent it conflicts with this holding.

See, e.g., S.C. Code Ann. §§ 4-10-10 through -100 (Supp. 1994) (Local Sales and Use Tax Act).

See, e.g., S.C. Code Ann. § 4-21-10 (1986) (counties may impose special tax, fee or service charge on property or occupants thereof to pay for fire protection services, ambulance services, and/or medical clinic facilities). Note that § 4-9-30(5)(a) authorizes ai property-related tax or uniform service charge for the same purposes.