Charleston officials say sales tax hike needed to fund pension

The Charleston City Council’s finance committee is scheduled to discuss a proposal Monday night that would raise the sales tax another half-percent to help address the city’s 30-year uniform pension debt.

The sales tax climbed from 6 percent to 6.5 percent last year to finance renovations at the Charleston Civic Center, and another half-cent hike would help Charleston keep up with pension trust fund payoffs that are growing annually.

City Manager David Molgaard said the increase would fund those pension payments for at least 12 years.

“It will get us down the road and allow us to continue to make improvements and adjust accordingly,” he said.

Charleston’s pension debt for its firefighters and police officers is $280 million with a bill that will increase $500,000 per year. The trust fund must be fully funded in 30 years.

Mayor Danny Jones originally proposed raising trash and fire fees, but that would only cover increasing pension costs for two or three years.

The city can’t raise the tax on its own—it has to get the approval of the state Home Rule Board. There first has to be a public hearing, followed by an appearance before the board and then back to Charleston City Council for two readings on the proposal. The increased tax would take effect in the summer of 2015.