The General Assembly doesn't convene until January, but already South Carolinians are abuzz about a legislative proposal to drastically reduce property taxes and replace the lost revenues by adding 2 cents to the state's 5-cent sales tax.
It's estimated that the higher sales tax, with groceries exempted, would raise at least $1 billion in revenues annually, or about $100 million more than the current tax system raises. The extra money would be put in a reserve fund to cover government costs during those years when the economy slows and retail sales fall off.
The tax switch also would trigger other huge changes in the way the state does business.
First, property taxes would be cut in half. But left up in the air, at least for now, is the question of whether the state would put a cap on local property taxes, guaranteeing the cutback, or whether home rule would prevail, leaving property tax decisions up to locally elected officials. That issue may have to be decided by voting on a constitutional amendment.
Second, all the school funding would come out of the higher sales tax. This means that, instead of lawmakers and local officials sharing the costs of public schools, the Legislature would assume the entire burden.
The Legislature also would decide how much money each school district gets. That issue will open up a Pandora's box of new controversies.
Per-student expenses likely would be equalized across the state, which would thrill rural and inner-city schools that have been grossly underfunded for decades and are looking to the courts for redress. But it could infuriate the wealthier school districts that use their stronger local tax base to spend more - sometimes a lot more - per student than the less well-heeled school districts can afford.
It's uncertain whether the wealthier school systems could continue their extra school spending under the state funding formula.
This issue could be the biggest obstacle to making the tax switch, says Senate President Pro Tem Glenn McConnell, R-Charleston, who also chairs the Senate Judiciary Committee. Yet something will have to be done if the courts rule that the current funding system is unfair to the poorer school districts.
Usually in election years, politicians try to stay away from controversial issues, but it doesn't look like that's going to happen in South Carolina in 2006. It hasn't even started yet, but it's already shaping up as a very interesting legislative year.