Gov. Mark Sanford announced Friday that he has vetoed a bill aimed at protecting homeowners from huge property tax increases. The bill would have imposed a 20 percent cap on property tax reassessments.

The main reason for the veto, he says, is that the bill is unconstitutional. The state constitution requires property to be assessed at fair market value. If a $100,000 home appreciates in value and ten years later is worth $200,000, this proposed cap would limit the assessed value to $120,000, not fair market value.

"Any bill that comes across my desk, I have an obligation based on the fact that I put my left hand on the Bible, raised my right hand and swore to uphold the constitution, to look at the constitutional merits of that bill," Gov. Sanford said.

He says this kind of bill also requires a two-thirds vote in the House and Senate, but the bill got only a voice vote.

Another reason for the veto is that the bill would have had a big impact on school funding. School funding is now based on a complicated formula that takes into account a county's tax base. If this bill were in place, wealthier districts' values would be artificially low.

According to an analysis by the state Department of Revenue and state Department of Education, if the 20 percent cap were in place Greenville County's school district would lose over $700,000 in the first year.

Lexington County homeowner Betty Slusher was desperately hoping for some kind of property tax relief before next year, when Lexington will go through reassessment. Senior citizens like her now get a $50,000 exemption on their property taxes, but she's worried that the reassessment will raise her home's value so high that the exemption won't matter.

"We're not going to lose our home," she says. "We'll just freeze to death, starve to death or die from not taking our medication. And that's the real world that the governor and the politicians better look at in South Carolina."

Gov. Sanford says he understands homeowners' concerns, and points out that he's been pushing for tax relief for years. "I'm more than open to considering any property tax relief proposal that passes constitutional muster," the governor said.

Besides the constitutional issue and the impact on education funding, the state Chamber of Commerce says the bill would not have helped most homeowners anyway. While it would have limited big increases on beachfront or lake homes, counties would have had to make up for the money lost by raising the millage rate.

"What we found in our studies were that only about 11 percent of the taxpayers benefited from this, but about 75 to 80 percent would pay more to subsidize those," says Hunter Howard with the Chamber of Commerce. "So it was a huge shift in taxes rather than a tax cut." 

As an alternative that would be constitutional, the governor mentioned a bill that came up this year but didn't pass. A home's value would be set by its sale price. There would be no reassessments, and the home's value for property tax purposes would stay at the sale price for as long as the homeowner owned it. The value would then change with the home's next sale.