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Watch out as lawmakers tackle property tax reform

Short-term interests should not trump long-term impacts

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It's worrisome that major tax reform is being tackled in an election year for South Carolina House members and the governor.

The issue needs to be approached with a long view and not become a knee-jerk reaction to complaining taxpayers. Election years tend to skew toward the short-term need to return to office.

There's a lot to be said for a variety of taxing sources. Heavy reliance on a single source can spell trouble. Indeed, that's part of the problem with property taxes. Relying too much on a sales tax also could spell trouble, particularly because of its susceptibility to economic downturns.

Already forecasters are predicting the state's revenues will be heading down. Senate Finance Committee Chairman Hugh Leatherman has warned that a $164 million surplus for 2006-2007 will be followed by a $132 million deficit the year after that. And the year after that, a $402 million deficit is expected.

That's because the state's revenues are expected to remain flat at $6.2 billion during the next three years, while spending is expected to increase to provide for ever-increasing services.

State lawmakers' handling of our last boom and bust cycle is not encouraging as we look to the next round. Surpluses and one-time money were squandered, leaving us raiding trust funds and running unconstitutional deficits when times turned bad. That's what makes too much reliance on sales tax revenue troublesome.

The issue of escalating property tax bills is being attacked from a variety of directions so far. They include increasing the state sales tax from 5 percent to 7 percent and using the additional money to reduce property tax bills. House and Senate versions of such an increase put the money to use in different ways. The House plan would eliminate property taxes, while the Senate plan would only cut property taxes going to pay for school operations and for personal property tax on vehicles.

The moves to provide property tax relief for homeowners has business operators worried about an increasing tax burden. And it also has local governments worried about greater state control over their main revenue source. In addition to cutting property taxes, lawmakers are looking at how property is assessed.

These myriad approaches with no guiding vision from an independent review of how best to tackle an extremely complex problem can only spell trouble. We don't need to see a repeat of what we've seen in the past: conflicting legislation coming out of the House. (One former local House member's answer to that: the Senate will clean it up.)

What lawmakers appear to forget is that we still need to pay for state and local services, whether it's through property taxes, sales taxes or whatever fees they come up with. Roads and schools need to be built; firefighters, policemen, teachers need to be paid; trash needs to be hauled. The list goes on and on. To pretend otherwise is to delude ourselves.

The good news is that most, if not all these changes, will require changes to the state constitution. That means, it will take two-thirds of each chamber to pass a suggested change and a vote by us to finally approve it.

We all need to be paying attention, and we need to understand the ripple effects of any change in the tax structure.