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.