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The New Media Department of The Post and Courier

SUNDAY, JULY 10, 2005 12:00 AM

Sales tax among fastest ways to provide property tax relief

According to our recent report, real property reassessment in the greater Charleston area hasn't produced the howls some expected when many residents received notices of soaring property values a few weeks ago. That doesn't surprise Carl J. Smith, mayor of Sullivan's Island, one of the priciest local beach communities. He expects the real eruption when the tax bills arrive this fall. Mayor Smith is among those local officials anxious to give their input to lawmakers on alternatives to the current method of property taxation in this state. While dozens of ideas for relief are being floated, state lawmakers should focus on a resolution that has at least some chance of withstanding legal challenges.

It does now appear that the property tax -- levied only by local governments for both their operating budgets and support of state mandates such as education -- finally has the full attention of the legislative leadership. As Senate President Pro Tempore Glenn McConnell notes on our Commentary page today, he has appointed a special subcommittee to work on the issue until the Legislature convenes in January. That subcommittee includes members of both the Judiciary and Finance committees which, as the senator notes, should increase the chance for reform. A separate House committee also is at work.

Anxious Sullivan's Island residents, where property values have increased an average of 80 percent, gathered for a recent discussion of the issue with Sen. Chip Campsen, a member of the McConnell subcommittee, and East Cooper Rep. Ben Hagood. Mayor Smith tells us he knows of residents who are selling their properties because they can't afford to pay the property tax on the reassessed value. He said one property that had been in a family for 52 years sold within 24 hours after it was placed on the market recently.

While he notes that most islanders don't dispute that the value of their property has soared in recent years, he despairs when they are forced to sell. "This is a very old established community which depends on one generation to another to give some consistency." He fears the loss of that consistency undermines the community and could lead to its disintegration.

Sullivan's Island is by no means alone in terms of the impact of this year's reassessment. Values also rose steeply on neighboring Isle of Palms and in the more rural McClellanville area as well as Folly Beach. Officials have said that generally those owners whose values increased by 50 percent or less shouldn't see a tax hike unless local government budgets increase substantially. In Charleston, the school board budget has done just that, which means that residents generally will see tax hikes and those whose property values are in the Sullivan's Island category will see a major tax hike later this year.

Mayor Smith says he's particularly interested in one of the eight alternatives Sen. McConnell outlines on the Commentary page -- increasing the sales tax by enough to replace the property taxes raised to support education. Specifically, a bill is pending in the Senate that would raise the sales tax by 2 percent to pay for education, which Mayor Smith noted is about 60 percent of the local property tax bill. Even better, the mayor points out that raising the sales tax isn't a constitutional issue and could be done "very quickly."

He's got an important point. The Legislature surely recognizes after its statutory reassessment cap effort -- aborted by the state Supreme Court -- that any tinkering with fair market value will require a constitutional amendment. An amendment can't go to the voters until next fall and the outcome of such a proposal is extremely questionable.

While Sen. Campsen also prefers the 2 percent sales tax route, he also recognizes that solution isn't without its drawbacks. It's questionable, for example, that a 2 percent increase would raise all the money needed for education without removing many of the exemptions now granted, he noted. "This is one of the most complex issues I have ever dealt with," he said. "It's like a waterbed. You press down in one spot and something else pops up."

Certainly a partial elimination of the property tax is less extreme than throwing it out entirely. The latter would leave local government without any real source of revenue and hostage to the largesse of the Legislature.

Sen. McConnell says hearings will be held across South Carolina and urges citizens to come out and speak up.

Don't miss them. No other pocketbook issue is more important or more directly affects the citizens of this state.


This article was printed via the web on 7/11/2005 11:04:40 AM . This article
appeared in The Post and Courier and updated online at Charleston.net on Sunday, July 10, 2005.