On Dec. 17 Gov. Mark Sanford vetoed the property reassessment legislation commonly referred to as the 20 percent cap bill. It took great courage to veto this bill; the legislation essentially shifted the tax burden from those who have the most valuable property to the remainder of the tax base.

The bill was unconstitutional on basic procedural grounds because the General Assembly failed to pass the bill with a recorded vote to reflect the two-thirds necessary to pass such legislation. The bill also violated the constitutional requirement that legislation must relate to a single subject.

The legislation is also unconstitutional on substantive grounds. In previous legislation, counties were given the option to cap property tax value increases at 15 percent per reassessment cycle. Judge Victor Rawl declared this legislation unconstitutional. The matter is now directly before the Supreme Court. Judge Rawl found that the 15 percent cap violated the equal protection clause and several provisions of Article 10 in the state constitution. These provisions are intended to provide a fair, equitable and uniform method of taxation of property.

The judge held in his order that “the Charleston tax cap is unlawful because of its conflict with the State Constitution and discriminates among tax payers in violation of equal protection.” The judge reasoned: “Why should one person be burdened to the benefit of another? Tax caps give tax relief to those who don’t need it, at the expense of those who do. If the requirement of a rational basis ‘means-ends’ link means anything, it should at least require that statutory schemes not exaggerate the very problem it purports to solve.”

The vetoed legislation would only change which taxpayers pay the property tax burden. The bill would have shifted about $462 million in taxes from rapidly appreciating properties to those that increased in value more modestly. Because there are no alternate sources to replace the revenue lost from the properties with capped valuation, property owners who failed to benefit from the cap would have to pay for benefits that others received.

The goal of tax policy should be to grow revenues for building the tax base, so that tax rates drop. This bill would have instead reduced the tax base by capping valuation, causing tax rates to increase. One only has to look at Charleston County, which has been ordered by the court to make more than 80,000 refunds to taxpayers who paid a greater amount because of the cap. Charleston County will refund between $9 million and $11 million to those taxpayers who were overcharged.

The cap values under this plan would have redistributed the amount of revenue school districts receive as a result of the index of taxpaying ability. This shift in revenue would increase the odds of success of the school equity suit. Assessors’ offices are required to report bona fide sales to the S.C. Department of Revenue along with the appraised value of the property.

If the index, by virtue of the cap, shows that our sales ratio is lower than it would have been in the absence of the cap, it would indicate that a county was “poorer” than it actually is. This means that Richland County would receive a larger share of state funding for schools. This is an unintended consequence of the tax cap.

Studies found that the property tax valuation cap produced a number of adverse results and were unable to support the proposal as sound public policy. One of the studies showed a shift of the tax burden as high as 11 percent.

The vetoed legislation failed to address the single greatest cause of increases in property tax, the school millage rate drivers. The statutory millage drivers in the Education Improvement Act and Education Finance Act require school districts to spend more money each year. This increase in millage is required by state statute, even if a more economical service delivery method is devised. Without addressing the school millage drivers, any relief the individual receives will be short-lived because school funding encompasses more than half of an individual’s property tax bill.

On Jan. 11, 1995, the Governor’s Advisory Committee on Property Tax Accountability and Reform stated: “Education funding is driven by formulas determined by the State Board of Education pursuant to the Education Finance Act (EFA) and the Educational Improvement Act. The State, however, does not finance the spending decisions it makes. The central thing we learned was that the present system does not work the way most people believe. What has been described as a property tax problem is not really that; it is a school financing crisis.”

I believe the governor is correct, and I support his veto of the proposed 20 percent property tax cap bill. We have a school funding crisis that can be resolved in many different ways. A cap on property tax that shifts the burden to the property increasing at a lower rate, however, will only make the problem worse.

In 1975, South Carolina established a uniform taxing system for the counties of this state intended to ensure fairness and equity for all property owners. The passage of this legislation would have destroyed all fairness and equity in the South Carolina tax system.

Mr. Cloyd is the Richland County assessor.