The Local Government Fund is established by the State Aid to Subdivisions Act (S.C. Code of Laws Chapter 27, Title 6). The State provides funding for counties and municipalities through the Local Government Fund. Counties receive 83.278 percent of the fund, and municipalities receive 16.722 percent of the fund. Fifty cents per capita is withheld from the portion of the Local Government Fund allotted to counties per §44-6-146 for Medicaid Services. Funding is distributed by the State Treasurer based upon the most recent decennial U.S. Census.
The statutory formula for determining the required appropriation to the Local Government Fund has changed over time, most recently in Act 84 of 2019. The change in formula first applies to appropriations for FY 2020-21. The formula currently requires an appropriation equal to the projected increase in recurring general fund revenues compared to the prior year’s recurring general fund expenditure base, up to 5 percent. From FY 1992-93 to FY 2019-20, the statutory formula required an appropriation of not less 4.5 percent of general fund revenues of the latest completed fiscal year. The statutory funding formula was suspended by budget proviso for FY 2008-09 to FY 2019-20. Prior to FY 1992-93, funding was based on varying percentages of specific general fund revenues.