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Senate taking longer look at property tax options

Senators are taking on issues House members glossed over

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Cooler heads are prevailing in the state Senate, where a Senate Finance subcommittee has knocked out the idea of taking away resident homeowner property taxes from all local government operations and has focused instead on the idea of turning over to the state the job of paying for school operations.

But senators still have a lot of questions, says Sen. Scott Richardson of Hilton Head Island, including exactly how the state would redistribute money to the state's 85 school districts, a question the House left unanswered in its zeal to pass property tax reform in an election year for its members. Richardson says senators also want to look at expanding property tax relief beyond resident homeowners so that property tax relief for them does not become a burden for other types of owners.

Thank goodness it's not an election year for senators.

But even though the power grab to control revenue for all local government operations seems to be derailed, the decision to move forward with school operations has its problems. How will the money be returned to the school districts? Property tax relief for the first $100,000 in home value did not come back dollar for dollar as promised. And state officials saw the cost explode as new homes were built. Eventually, they capped the amount to be used for property tax relief, leaving local districts to make up the difference.

For many years, local officials have ground their teeth in exasperation at the complicated formulas that allocate state funding for schools. During the last legislative session, local lawmakers fought hard to maintain about $6 million in funding under the state's Education Finance Act, which looks at a county's "ability to pay," even as lawmakers increased the per student allocation. This year, the House budget does not include any money to help Beaufort and Charleston counties. Beaufort County is looking at an estimated $12 million hit.

While escalating property values have hit us in the pocketbook, our growing tax base also has allowed Beaufort County to set its own course on many education initiatives.

The big questions, Richardson says, are how to pay for property tax relief and how to redistribute the money.

Richardson said the committee also will look at "circuit breakers" that could target tax relief where most needed. The full Senate already has passed a property assessment bill that caps reassessments at 3 percent a year, not to exceed 15 percent over five years. The bill also calls for fair market value to be reset when a property's ownership changes or substantial improvements are made. The idea, he says, is to put in a point-of-sale assessment method, but allow local governments to at least capture inflation.

Caps and point-of-sale methods come with their own set of problems. A Clemson University study concluded that limiting assessment increases to 15 percent for properties rising rapidly in value merely shifts the tax burden to people with lower-valued homes. Point of sale can mean widely differing property values in the same neighborhoods.

A bright spot in this is that the Senate is living up to its role as the more deliberative body between the two chambers.

Property tax "relief" could prove to be a case of "be careful what you wish for."