Senate delays property tax decision

Committee says it needs more time

By Zane Wilson

The Sun News

COLUMBIA - A Senate subcommittee studying a freeze on property values put off a decision Thursday after running into more difficulties in implementing the change.

Members were told that the change, designed to provide tax relief for owners of property that is rising rapidly in value, will cause more taxes to go up than go down.

Sen. Vincent Sheheen, D-Camden, said he can't justify to his voters passing a law that would give tax relief to 20 percent of owners and cause a tax increase for 80 percent.

But Sen. Chip Campsen, R-Isle of Palms, said it may be better for more people to have a slightly higher tax to protect longtime residents who are in danger of losing their homes because they can't pay the taxes.

But Campsen said he is also interested in other ways to solve the problem, such as tying property tax to income so that people who may be living on Social Security while occupying a longtime family residence on the coast are not taxed thousands of dollars.

The subcommittee also stumbled over what could be one of the biggest flaws in the proposal, allowing counties the option to freeze valuations at the 2004 level, tie taxes to inflation, impose a cap on valuations or keep their existing system.

Many counties would simply opt to keep the existing system, which would defeat the purpose, some members suggested.

"We may be giving false hope to the taxpayers," said Sen. Brad Hutto, D-Orangeburg.

The subcommittee members said they don't like including options but don't think the bill will pass without them.

"The options have to be in here in order to get the votes," Sen. Larry Martin, R-Pickens, said.

Another problem is that rolling back values to 2004 leaves some counties with values from their last reassessment as far back as 1999, said Burnie Maybank, state Revenue Department director.

That skews differences in values even further in those counties and could cause greater shifts in who pays more and who pays less, he said.

If lawmakers want to provide tax relief, they should tie property taxes to income, Maybank said.

"The taxes on single-family residents in South Carolina are quite low by comparison," he said. At the same time, taxes on manufacturing are among the highest in the country.

He also said that what is known as the index of taxpaying ability, a formula used to dole out sales tax money to school districts, will be affected by changes in property value assessments.

The effects would mean some counties would appear poorer than others although they are not, so they would get more money. That money would come from truly poor counties, Maybank said.

He suggested legislators change the index if they are going to change assessment formulas.

State Economist Bill Gillespie told the subcommittee the school funds index will be affected, but he could not say if it would be the same effect as presented Tuesday by the S.C. Association of Counties.

That report showed Horry County getting more money under the index while Georgetown County got less.

Subcommittee members asked Gillespie for more specific figures on the tax revenue for counties from 2004 and how much they would have to raise taxes to make up for the change.

The subcommittee will meet again Tuesday.

Also next week, work is expected to begin on a House bill that proposes a 2-cent sales tax increase, with the 7 cents to go toward cutting all owner-occupied property taxes.

The S.C. Chamber of Commerce and other business groups are objecting to the proposals, saying they will force taxes up on business property.

Contact ZANE WILSON at 357-9188 or zwilson@thesunnews.com.

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