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Property-tax reform bills up for debate in House

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BEAUFORT -- Property owners should have a better picture on tax relief by the end of the week as the state House of Representatives debates a proposal to reduce the tax and add 2 percent to the state sales tax.

Property owners in Beaufort County have been calling for reforms since a 2004 reassessment showed property values skyrocketing -- some more than five times what they were during the 1998 reassessment.

Under the House bills, owner-occupied homes would be exempt from local property taxes for anything but debt payments. That would leave the county, municipalities, school district and other public service districts to be funded largely by the increase in the state's sales tax from 5 percent to 7 percent.

If approved, the property tax exemption would be put to voters in a November referendum. The increase in the sales tax would be a procedural measure that would follow that approval.

Legislators have given the bills various degrees of support, but most are looking for alterations before a House vote.

Rep. Richard Chalk, R-Hilton Head Island, a member of the ad hoc committee that vetted the bill, said he's one of several House members with concerns. But election-year politics may improve the bill's chances for success.

"There are a lot of people scared to vote against it," he said.

Rep. Catherine Ceips, R-Beaufort, said she supports the bill. Chalk and Rep. Bill Herbkersman, R-Bluffton, said they had some concerns about the plan's details. Rep. Thayer Rivers, D-Ridgeland, said he opposes the bill, considering it tax relief on the backs of average taxpayers.

Although the bill would bring dramatic reductions in property taxes for many homeowners, the changes provide deeper cuts for more expensive homes.

For example, on Lady's Island a property tax bill on a $100,000 home would be reduced by 73 percent from $395 to $103. But the taxes on a $500,000 home would drop 83 percent, from $3,218 to $516.

Even if a majority of the House supports the 2 percent measure, it will move to a Senate chamber where talks on property-tax reform have moved much slower.

A Senate version stretches the tax benefits beyond owner-

occupied homes but limits the relief to property taxes for school operations. A Senate subcommittee is debating that proposal.

As decisions near, detractors are raising opposition on several issues, including distribution inequities and the impact on business and recruiting new industries.

Expected statewide distributions would match local budgets dollar for dollar in 2007, then raise allocations based on population increases. But the specifics on how increases would be measured and what other factors might be considered has not been determined.

Coastal legislators are worried the measure does not account for the tourists who fill roads and stress local services but wouldn't be included in per-capita funding.

The S.C. Chamber of Commerce also criticizes the plan, noting that the House proposal provides no property tax relief for businesses even though they will bear increased costs with a higher sales tax.

The sales tax increase also would distance South Carolina from the sales tax in Georgia and North Carolina, both less than 5 percent, possibly sending shoppers in Beaufort and Jasper counties across the border to Savannah.

Democrats have said they're likely to propose a bill this week that would increase the sales tax by 1 percent and only pay for school operations.

The sales-tax plan may struggle this year, but legislators expect reassessment reform to overcome criticisms and win approval.

Coastal legislators have shown strong support for point-of-sale reassessment. But legislators in rural counties that have not seen surprising jumps in assessed values may not see the merits of the point-of-sale method, Chalk said.

Legislators also said they hoped the elimination of sales tax on groceries would be approved. That measure was inserted in the sales tax plan as a concession to middle- and low-income homeowners and renters who may see little or no benefit from the reforms.

Contact Greg Hambrick at 986-5548 or . To comment on this story, please go to beaufortgazette.com.

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