Lawmakers continue to craft property reform bill

COLUMBIA, S.C. - A state Senate subcommittee has revised what to include in a bill that would cut property taxes by raising the state sales tax.

The Senate's soon-to-be-drafted bill will not deal with residents' second, non-rented homes and "other" personal property such as boats, even though the senators decided last month to include those items. It also won't immediately eliminate the sales tax on groceries, as decided last week.

Senate President Pro Tem Glenn McConnell, R-Charleston, said Wednesday the previous decisions would cause a $390 million revenue shortfall.

"The cold hard facts are this," he told the joint Senate judiciary and finance subcommittees. "Something needs to come out."

Suggestions to increase the state sales tax by 2.5 cents, rather than 2 cents, went nowhere. Half of the committee's 12 members were willing to do so - not enough to suggest it would pass the full Senate.

"We need to come up with something we can pass," said Sen. Hugh Leatherman, R-Florence. "If not, there will be no relief."

The senators did agree to cut property taxes on owner-occupied homes and vehicles, give renters a tax credit, and put $125 million in a reserve fund for lean years. The state sales tax on groceries would be reduced to 2 percent the first year, and eliminated in future years. Residents who rent all 12 months in a tax year could check a box on their IRS form to get extra money back in their refund.

The Senate's proposal would cut only school operating expenses from property tax bills, unlike a version being drafted in the House that would also cut city and county operating costs, all on owner-occupied homes.

"Education is clearly the state's responsibility. It's an easy part to roll up," McConnell said. "Fifty percent relief is better than no relief." School operating expenses account for more than half of residents' property taxes.

State Sen. David Thomas, R-Greenville, said he would try to broaden the Senate's version when it goes to the floor.

Leatherman said, "I'd like to join you in saying, 'Let's take it all off.' But that's not political reality."

McConnell expects to have a draft of the bill for the subcommittees' next meeting Dec. 1.

"We've reached consensus. It means reform is on the way," he said. "If I were the public, I would be excited."

Sen. Wes Hayes, R-Rock Hill, often cast the lone nay vote Wednesday. He said he fundamentally disagrees with supplanting property taxes with increased sales taxes.

"It's a tax swap. It's not a tax decrease," Hayes said. "People need to understand that."

A House committee continued Wednesday to work through issues of its version of the property tax bill. It decided to set up a reserve fund too, but not through a one-time upfront shot. The House version would set aside any money collected above expectations from the additional sales tax. House members also agreed to review a load of sales tax exemptions in 2010 and eliminate any the General Assembly doesn't continue to support.

The House property tax committee will meet again Dec. 7.

"It seems to me there are still a lot of unresolved issues," said Roy Parker, who lives on the Lexington side of Lake Murray and attended the Senate subcommittee meeting. His property taxes increased 32 percent this year. "There's lots of work to do to get satisfactory property tax relief."