SOUTH CAROLINA REVENUE AND FISCAL AFFAIRS OFFICE
S
TATEMENT OF ESTIMATED FISCAL IMPACT
WWW.RFA.SC.GOV • (803)734-3793
This fiscal impact statement is produced in compliance with the South Carolina Code of Laws and House and Senate rules. The focus of
the analysis is on governmental expenditure and revenue impacts and may not provide a comprehensive summary of the legislation.
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H. 3861
Fiscal Impact Summary
This bill prohibits local governments from enacting or enforcing ordinances, resolutions, or
regulations that prohibit short-term rentals. Should a subdivision violate these provisions, they
may not assess the 6 percent property tax, and the State Treasurer’s Office (STO) must withhold
their State Aid to Subdivisions distribution until the policy that violates this bill is repealed.
STO indicates that this responsibility will be managed within existing appropriations and will
have no expenditure impact. Additionally, STO indicates that the withholding of funds would
occur upon receipt of notice. However, this bill does not require STO to be notified, which may
impact withholdings.
All counties and the Municipal Association of South Carolina (MASC) were contacted regarding
the potential fiscal impact of this bill. Beaufort and Chesterfield Counties both indicated that this
bill will have no expenditure impact. MASC surveyed municipal government officials in South
Carolina and found that among 45 municipalities, there were at least 30 unique regulations on
short-term rentals. While no complete prohibitions on short-term rentals were identified, South
Carolina municipalities do substantively regulate short-term rentals. MASC noted that at least 11
municipalities have regulations on short-term rentals that may be prohibited under this bill.
MASC further indicated that the inability to collect the 6 percent property tax or receive State
Aid to Subdivisions on any municipalities that are construed to be prohibiting short-term rentals
would have a significant impact on local revenue.
Explanation of Fiscal Impact
Introduced on January 30, 2025
State Expenditure
This bill prohibits local governments from enacting or enforcing ordinances, resolutions, or
regulations that prohibit short-term rentals. If a subdivision violates these provisions, they may
not assess the 6 percent property tax, and STO must withhold their State Aid to Subdivisions
distribution until the policy that violates this bill is repealed.
STO indicates that this responsibility will be managed within existing appropriations and will
have no expenditure impact. Additionally, STO indicates that the withholding of funds would
Bill Number: H. 3861 Introduced on Januar
y 30, 2025
Subject: Short-term Rentals
Requestor: House Medical, Military, Public, and Municipal Affairs
RFA Analyst(s): Vesely
Impact Date: March 4, 2025
__________________________________
Frank A. Rainwater, Executive Director
DISCLAIMER: THIS FISCAL IMPACT STATEMENT REPRESENTS THE OPINION AND INTERPRETATION OF THE
AGENCY OFFICIAL WHO APPROVED AND SIGNED THIS DOCUMENT. IT IS PROVIDED AS INFORMATION TO
THE GENERAL ASSEMBLY AND IS NOT TO BE CONSIDERED AS AN EXPRESSION OF LEGISLATIVE INTENT.
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H. 3861
occur upon receipt of notice. However, this bill does not require STO to be notified, which may
impact withholding.
State Revenue
N/A
Local Expenditure
All counties and MASC were contacted for the potential impact of this bill on local government
expenditures. Beaufort and Chesterfield Counties both indicated that this bill will have no
expenditure impact on their counites.
Local Revenue
All counties and MASC were contacted for the potential impact of this bill on local revenue.
MASC indicated that the inability to collect the 6 percent property tax or receive State Aid to
Subdivisions would have a significant impact on local revenue. For reference, in FY 2024-25,
State Aid to Subdivisions totaled approximately $332.7 million. The Local Government Fund
distributions from Aid to Subdivisions, the largest category, totaled $291.3 million, of which
approximately $240 million was distributed to counties and $48.7 million to municipalities.
The revenue impact will vary depending on the local ordinances in place. Two counties
responded and did not indicate an impact on local revenue. However, if any entities have these
provisions, they would be required to repeal them in order to collect property taxes on real
property assessed at 6 percent and receive Aid to Subdivisions distributions.
Further, MASC interprets the restriction against prohibiting the rental of “a residential dwelling
to a short-term guest” as any short-term rental regulation that may ultimately result in at least one
dwelling for one short-term rental guest being excluded or denied. Under this interpretation,
MASC noted that at least 11 municipalities have regulations on short-term rentals that may be
prohibited under this bill.