Veto needed for tax cap law

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Gov. Mark Sanford has on his desk a bill passed on the last day of the legislative session that's probably unconstitutional and undoubtedly a bad idea. The bill seeks to reward homeowners whose property is quickly increasing in value by shifting some of their tax burden to other homeowners and businesses.

The law capping how much property values can increase during a county's reassessment would create artificial winners and losers during each county's mandatory reassessment of property. The winners would be those whose property increased more than 20 percent. They would get a break while those whose property increased less than the arbitrary cap would have to help make up the difference.

The state Legislature loves to tinker with property taxes. These taxes are more conspicuous than many others, and those who own property that appreciates rapidly have to pay higher taxes. So they complain, often loudly.

Before state law required periodic reassessments, property could sit on the books for years at a price that didn't reflect the property's value. The inequity was inescapable: Neighbors could pay dramatically different property tax bills simply because one had owned property for a long time and another was new to the neighborhood.

If the bill putting in place a 20 percent cap on increases in property values for homes and businesses does take effect, it will ultimately increase the tax bill for homeowners in more modest neighborhoods and many businesses. Counties and other taxing entities will need to raise the millage rates so they don't lose money after a reassessment, and those higher millage rates will disproportionately punish homeowners and businesses with property that didn't show a tremendous increase in value.

The fairness issue should be enough to persuade Sanford to use his veto pen, but if it's not, there are other issues to consider, too.

First, the state constitution requires all property to be assessed at its fair market value. The bill rushed through on the closing day of the legislative session carves out a protected class of property owners who would no longer pay property taxes based on fair market value.

Second, an exemption to the property tax law requires a two-thirds vote in each legislative chamber. The bill that would put in place the 20 percent cap passed the House and Senate on a voice vote — meaning there's no record of the bill passing by a two-thirds vote.

Sanford is looking into legal issues with the property tax cap, and he has until January to act on the bill. It deserves a veto, now rather than later.