A plan to lower property taxes while providing a more stable way for South Carolina to pay for its schools could get a new lease on life this week in the General Assembly.

Under the proposal, money generated by an increase in the sales tax would replace the portion of local property taxes now paying for schools.

The bill, which Sen. Vincent Sheheen, D-Kershaw, will introduce, is one of several lawmakers are pitching to address growing concern over rising property taxes.

But Sheheen’s proposal could generate the most heat.

By linking the state sales tax and local property taxes, it aims to tackle the complex and controversial issue of who should bear the burden of paying for schools.

Supporters say a fundamental shift in responsibility for the state’s public schools is needed.

“You’re starting to see a real desire to change the tax system,” Sheheen said. “This is really a question of who you’re taxing, where you’re taxing and how you’re taxing.”

TWO PLANS

Sheheen plans to introduce two bills — either of which he says would be an improvement over the current system.

One option would add 2 cents to the state’s sales tax to replace property taxes used for local schools. Some sales tax exemptions, such as for newspapers, would be scrapped.

Another would add 1 cent to the sales tax and set a statewide rate at which counties can tax property, also called a millage rate. It also would eliminate the sales tax on food.

Sheheen says both plans are “revenue neutral,” which means overall taxes shouldn’t go up. State economists have not analyzed either plan.

He says the bills would dramatically increase the amount of money the state spends per student, bringing it to more than $5,000 when fully implemented, up from the current $1,850 per student.

The 2-cent plan, which is similar to one introduced in 2003, already has picked up support from Republicans and Democrats alike, including new House Majority Leader Jim Merrill, R-Charleston.

Other proposals to lower property taxes focus on capping property reassessments or offering tax exemptions. A bill passed by the General Assembly to cap property reassessments at 15 percent was vetoed by Gov. Mark Sanford last year.

Sheehen’s plans likely will be met with resistance. While the change could be a boon to poorer school districts that rely heavily on state dollars, others worry the plan would hamstring efforts to raise local tax money for schools.

“Is it trying to cause public education to be funded at a mediocre level all over the state?” said Karl Fulmer, Lexington 1’s assistant superintendent for finance.

Property taxes in Lexington 1 help to operate new schools and prized academic programs, like foreign language instruction in elementary schools.

Fulmer said such programs are what set Lexington 1 apart, and residents shouldn’t be blocked from contributing.

“I’d be nervous about anything that didn’t allow school districts the flexibility to deal with circumstances in their districts,” he said.

A LINK IN ISSUES

Concern over how schools are funded is not the reason property taxes are being driven to the top of many lawmakers’ agendas, but the issues are definitely linked.

“When you’re dealing with property taxes, it’s not a tax cut as much as it is a shift,” said state Rep. Kenny Bingham, R-Lexington, who supports Sheheen’s 2-cent proposal.

A shift in school funding in recent years — placing more of the burden on counties to pay for schools — is at least partly responsible for increases in property taxes.

Wealthier districts have the ability to raise more money through property taxes to make up for the shortfall. Poorer ones have fewer homeowners, and their industries have lower property value, so their ability to raise dollars is more limited.

About 40 percent of Lexington 1’s $118 million budget comes from property taxes. In contrast, only 13 percent of Florence District 5’s budget comes from property taxes.

From 1998 to 2003, the average millage rate on property rose by 9 percent statewide, according to the S.C. Association of Counties.

Some homeowners, and not just those in high-growth areas, are feeling the squeeze. Property tax rates in rural Allendale County increased by 33 percent and by nearly 50 percent in Barnwell County.

“There’s now a huge movement in support of property tax relief,” said Bingham, whose own Lexington County has seen a 24 percent increase in millage rates.

House Democrats tried to use the calls for property tax relief as a club last week in their unsuccessful bid to derail a bill that would lower income taxes.

The state office that conducts financial analysis on pending legislation is backlogged with nearly 20 bills relating to property tax reduction. Most of them would leave it up to the counties to figure out how to recoup lost revenue as a result of limits the General Assembly placed on them. That would likely come in the form of even more tax increases.

Rep. Bobby Harrell, R-Charleston, who heads the House’s budget-writing committee, said those plans could have “serious consequences” and probably won’t earn his support this year.

“I’d be very concerned about affecting local tax revenue without replacing it with something,” he said.

Reach Stensland at (803) 771-8358 or jstensland@thestate.com.