The bill has been on the governor's desk awaiting his decision since lawmakers approved it on the last day of the legislative session and headed for home. While the governor could hang onto the bill until January, he should settle the issue quickly with a veto.
Local governments across the state face a quandary. State law mandates that each county reassess property every five years. Many counties are in the middle of that process this year, as is Beaufort County, which delayed its reassessment a year, awaiting a decision in a case before the S.C. Supreme Court.
The legislation is suspect on several counts. The state Chamber of Commerce contends that since there was no recorded vote as required by laws that change the tax structure, no one knows whether the legislation was properly approved. The state constitution also requires that property be assessed at fair market value.
Government leaders need to take a step back and rethink the issue.
The S.C. Supreme Court has yet to rule on a reassessment cap in Charleston County. If the governor signs the current bill, it will delay a decision by the court since the state law supersedes local law. The court would have no reason to rule on the Charleston case, delaying an answer on the assessment cap.
But the biggest reason the governor should veto the legislation is found in a Clemson University analysis of Beaufort County's proposed law. The study says a cap mostly benefits those who own expensive property. If the goal is to help longtime property owners and those on fixed income or in the lower income bracket to keep their homes, a tax cap isn't the way to do it. According to the Clemson study, such a law would shift the burden from the highest-valued homes to more modest-valued homes.
Previously we have pointed out that other states and communities from Hawaii to Chicago to Washington, D.C., also have wrestled with an assessment cap spurred by robust real estate markets. These communities have drawn back or modified their proposals.
In addition to the homestead exemption that already exists for elderly homeowners, the state should consider other options, including means-based relief. Homeowners and renters below a certain income could receive a tax credit; or limit property tax increases to a certain percentage for low-income homeowners who have owned their property for a specified period of time; or limit the eligibility for the property tax cap to homes with assessments below a specified value, such as $200,000.
The governor's staff is researching legal issues surrounding the bill that may ultimately sway his decision. But the governor should use his veto pen now based on the fairness issue alone. Owners of modestly priced homes shouldn't have to foot the cost of government for those people who live in expensive homes.