Committee Report

April 21, 2026

 

H. 5093

 

Introduced by Reps. Caskey, Bannister, Long, Lawson, C. Mitchell and Yow

 

S. Printed 4/21/26--H.

Read the first time February 4, 2026

 

________

 

The committee on House Ways and Means

To whom was referred a Bill (H. 5093) to amend the South Carolina Code of Laws by amending Section 12-36-90, relating to the definition of gross proceeds of sales, so as to exclude amounts paid by state, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass:

 

B.W. BANNISTER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill excludes the amounts paid for contracts for services entered into by the state or political subdivisions for Emergency Services IP Network (ESInet), in support of Next Generation 911 in South Carolina from sales tax.

This bill is not expected to impact expenditures for DOR as the changes will be administered with existing staff and resources.

The state ESInet contract is administered by RFA, and 39 counties are currently serviced by the state contract. The current state ESInet contract cost is approximately $7,105,000 annually and is funded by 911 fees charged on wireless phones. Based upon the current state contract and information from counties, sales tax is not currently being collected on ESInet services contracts. Sales tax is currently collected on taxable items within these contracts, and this bill does not affect the sales tax on those items. This bill expressly clarifies that this service contract is not subject to sales tax. However, if ESInet services contracts are determined to be subject to sales tax, the state contract would be subject to the 6 percent state sales tax rate as well as an additional local sales tax rate of 2 percent for Richland County. Applying an 8 percent sales tax to $7,105,000 yields approximately $568,000. Therefore, if sales tax is imposed on the state contract, this would increase RFA's Other Funds expenses from the 911 fund by $568,000 beginning in FY 2026-27.

State Revenue

The bill is not expected to impact state sales tax revenue due to excluding amounts paid for state or political subdivision ESInet contracts from sales tax. The state ESInet contract is administered by RFA. Thirty-nine counties are currently included in the state ESInet contract, 5 counties contract their ESInet services locally, and 2 counties currently do not utilize ESInet services. Based upon the state contract and information provided by counties, sales tax is not currently being collected on the total price of ESInet contracts. Sales tax is currently collected on taxable items within these contracts, and this bill does not affect the sales tax on those items. Based upon discussions with DOR, this bill clarifies that the total price of these contracts is not subject to sales tax and is not expected to impact state sales tax revenue.

Based on data provided by counties and RFA, the total annual price of the state contract is approximately $7,105,000, and total ESInet contract costs for county contracts is approximately $1,949,000. If these contracts are determined to be subject to sales tax, based on the state sales tax rate of 6 percent, state sales tax collections would increase by approximately $543,000 beginning in FY 2026-27. Of this amount, General Fund revenue would increase by approximately $362,000, EIA revenue would increase by approximately $90,500, and HEX revenue would increase by approximately $90,500.

 

Local Expenditure

This bill is not expected to impact local expenditures as sales tax is not currently being charged on ESInet services contracts and is only applied to the taxable items within the contract, such as equipment, that are unchanged by the bill. However, if these contracts are determined to be subject to sales tax, RFA anticipates that total local expenses would increase by approximately $148,000 in total. Currently, Beaufort County, Berkely County, Charleston County, Florence County, Horry County, Goose Creek, and Summerville contract locally for ESInet services for each Public Service Answering Point (PSAP). These PSAPs submit contracts to RFA for reimbursement of eligible expenses from the 911 fund. Based on these contracts and information provided by Charleston County, Florence County, Horry County, Goose Creek, and Summerville, the total annual local contract cost is approximately $1,949,000. Applying the 6 percent sales tax rate and the statewide local average sales tax rate of 1.58 percent to $1,949,000 yields approximately $148,000 in increased local expenses if these contracts are subject to sales tax. These estimates are provided below for each entity. The actual local sales tax revenue may vary depending on the local sales tax rates in effect. The counties and cities noted that the increase in local expenditures for sales tax, if imposed, would require these local jurisdictions to either fund the expenses through existing resources, reduce spending on other services, or increase taxes and fees.

 

Estimated Local Expenditure Impact if ESInet Services Contracts Are Subject to Sales Tax

*Sales tax expense is based on an average local sales tax rate of 1.58% and may vary depending on local sales taxes in effect for each jurisdiction.

Note: Beaufort and Berkeley Counties did not respond to our request for comment on these estimates.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-36-90, RELATING TO THE DEFINITION OF GROSS PROCEEDS OF SALES, SO AS TO EXCLUDE AMOUNTS PAID BY STATE AND LOCAL GOVERNMENTS FOR THE EMERGENCY SERVICES IP NETWORK.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 12-36-90(2) of the S.C. Code is amended by adding:

 

    (m) amounts paid for contracts for services entered into by the State or political subdivisions thereof, for Emergency Services IP Network, also known as ESInet, in support of Next Generation 911 in South Carolina.

 

SECTION 2.  This act takes effect July 1, 2026.

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