The bill, which caps property value increases during a five-year period at 20 percent no matter how much the property's value actually went up, comes in response to public outcry for property tax relief, say state lawmakers, who passed the bill this week.
But the measure caught Beaufort County officials off guard just weeks before they planned to send 2004 property assessment notices to the printer, county assessor Bernice Wright said Friday.
The governor's signature would make the 20 percent cap effective immediately, according to an attorney with the Legislative Council who helped draft the bill but preferred not to be identified.
The governor is reviewing the specifics of the bill, spokesman Will Folks said Friday, but has not indicated whether he would sign it.
Sanford has until the fifth day of the next legislative session, which begins in January, to sign the bill. If he does not, it automatically becomes law. If he vetoes it, the legislature could override it.
The law applies when counties update property values on the tax rolls, a process called reassessment that the state requires every five years. All counties are on different reassessment schedules, but Beaufort County is in the middle of that process this year.
If the bill becomes law, property values would have to be recalculated before notices are sent out, Wright said, meaning the county could miss the state-mandated Oct. 1 deadline for mailing them.
In a reassessment year, the required notices usually are sent out in late summer to let people know what their updated values are, followed by tax bills later in the fall. Notices must reflect the 20 percent cap for properties that qualify, Wright said.
But to recalculate property values with the cap, the county needs to purchase new computer equipment and programs, which could take time to buy, install and program.
"It may mean we may not be able to meet our Oct. 1 deadline to send out assessment notices," Wright said.
In that scenario, the county would have to tax properties at existing values, she said. But state law only allows counties to delay reassessment for one year, and Beaufort County, scheduled for reassessment in 2003, already used up that year while considering a local 15 percent cap on property value increases.
After delaying the process, County Council in April decided not to adopt the 15 percent cap this year.
No county has ever tried to delay reassessment a second year, said Danny Brazell, spokesman for the S.C. Department of Revenue. He did not know what would happen if a county were forced to.
"The Department of Revenue would have to look at the legal ramifications of that," Brazell said.
While time could be an issue for the county if the bill becomes law, so could money. Buying the computer equipment and paying employees overtime to program it could cost about $100,000, officials estimated earlier this year when considering the local 15 percent cap. Costs would have to be recalculated given the shorter time frame officials would face, said county finance director Tom Henrikson, but the figure probably would remain about the same.
Money for computer equipment and overtime is not set aside in this year's budget or next year's, Henrikson said.
The 20 percent cap is not a cap on taxes. Depending on how much a property's value rises, the owner still could end up with a tax bill that is more than 20 percent higher after reassessment. Another key to a tax bill's bottom line is the tax rate, called millage, which local governments set each year.
While proponents of the bill say it would help property owners afford to stay on their land, some opponents say it simply shifts the tax burden from the wealthy to those with lower incomes.
Under the 20 percent cap, when property is sold the new owner initially must pay taxes on the full market value, not the capped value. After the next reassessment, the cap would be applied to the new owner.
If the bill becomes law, it would not affect the county's 2005 budget revenues. But for all taxpayers, it could mean a higher tax rate than the rate that would be set without the cap, Henrikson said.
Additionally, the cap would mean local governments and the school district could borrow less money than without the cap. That's because state law limits borrowing without voter approval to no more than 8 percent of the assessed value within a local government's boundaries.