North Charleston officials were bemused by Charleston County Council's vote last week to delay the countywide, 15 percent reassessment cap. As North Charleston attorney Brady Hair pointed out to us, the county can't impose the cap now even if it wanted to. As a result of a lawsuit by North Charleston, the county has been prohibited by the circuit court from activating the cap. If Gov. Mark Sanford were to sign a new, 20 percent statewide reassessment cap -- passed the last day of the legislative session -- there's every reason to believe it would meet the same fate. Indeed, that legislation may be even more flawed than we first thought.
One of the issues being considered by the governor's office is whether the cap even legally passed the General Assembly. Specifically, was it required to receive a two-thirds vote from both bodies? If so, it's impossible to determine whether it met that test since final approval was given by voice vote.
A two-thirds vote definitely was a requirement when the 15 percent local option cap was approved several years ago. Indeed, the first local option bill didn't meet the two-thirds test and had to be passed a second time.
Only Charleston County implemented the local option legislation. The county first ran into legal trouble when it limited the 15 percent cap to owner-occupied homes. The S.C. Supreme Court found the cap invalid, saying the state law didn't give the county the authority to decide who got the cap.
That decision, however, left unsettled the larger issue of whether a cap can be imposed at all without a constitutional amendment. The state constitution requires property to be valued at fair market value for tax purposes.
Even though the county is faced with huge refunds from the first, aborted attempt to impose a limited cap, it decided to proceed with a countywide cap until it was stopped by the North Charleston suit. While the case now is in court, there is still an ordinance on the books that says the cap will go into effect this fall. Council's vote to negate that ordinance reaffirms that the cap won't be imposed for at least a year, regardless of what the judge rules.
Actually, the new statewide 20 percent reassessment cap, if approved by the governor, would eliminate the 15 percent local option cap legislation. The North Charleston suit, which challenges the cap's constitutionality, would then be moot. It would be a shame to stop that lawsuit when it is so close to being heard by the high court.
The most likely challenger of a statewide cap is the S.C. Chamber of Commerce. The chamber's president, S. Hunter Howard Jr., told us Monday that preliminary research shows the cap would result in "a fairly significant shift of the tax burden among taxpayers, particularly to the business taxpayers."
Further, Mr. Howard said the chamber's research indicates that any exemption to property tax law must have a two-thirds vote of both bodies, noting that "neither body gave it the required vote."
"Our primarily concern," he said, "is that this is a major departure from fair market value. Once you go down that road, you are really going to destroy our property tax system. It is a dangerous precedent."
The governor's office says no decision has yet been made on whether he will veto the legislation. If the governor takes that step, the Legislature still would have until early in the next session to override the veto. If he signs the legislation into law, a new lawsuit is sure to follow. Meanwhile, many counties are in a dilemma trying to decide whether to try to postpone their legally required property reassessments.
In terms of taxpayer fairness, it would be a shame to see scheduled reassessments delayed. A veto by the governor would provide the best reassurance that the law won't change at least for the next six months. In the interim, the North Charleston lawsuit on the 15 percent cap could get a Supreme Court ruling, thereby providing the legal guidance the Legislature so obviously needs. A veto by the governor is not only legally prudent but the best and fastest way to get this important issue resolved.
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