A CAUTIONARY tale, in two parts.

Part 1: Last month, the Pickens County auditor announced that homeowners would be paying significantly higher property taxes next year because the county’s local option sales tax wasn’t bringing in enough money to keep up with the population growth.

“Because we’ve had a good economy, and the economy has grown since we started in sales tax in 1994, each and every year the sales tax has grown,” Auditor George Bryant told The Greenville News. “But we’ve had three years where our sales tax has basically not grown at all.”

The result: Homeowners will pay as much as $116 more in taxes on a $100,000 home next year.

Part 2: Days later, Greenville Sen. David Thomas was in Charleston touting his plan to eliminate all property taxes on houses and cars and replace them with a 2 percent sales tax. He was joined by Sen. Arthur Ravenel, who told The Post and Courier that passing this tax-swap initiative was his top priority in his final session in the General Assembly.

That’s just one of a number of proposals that, in varying ways and to varying degrees, seek to replace funding from property taxes with funding from sales taxes. A more comprehensive plan, spearheaded by Reps. Rick Quinn and Vincent Sheheen, would wipe out school property taxes and replace them with a 2 percent sales tax. Other House leaders may be coalescing around a plan to eliminate residential property taxes for schools and replace them with a 1 percent sales tax.

There are a number of reasons to like these general ideas, not the least of which is that they have the potential to end the war between schools and homeowners.

But there are also several reasons to run screaming from anyone who suggests them. Destabilizing the tax base leads the list. That’s what happens when you rely too heavily on any one type of tax to pay for government. When that primary tax-generator doesn’t bring in the kind of money you expect, you’ve got serious problems and no easy way to solve them. That’s why economists uniformly recommend that governments use a healthy balance of sales taxes, property taxes and income taxes; usually, economic changes that cause collections to come in low from any one of those are offset by changes that cause another to bring in more money.

And this is where Parts 1 and 2 of this cautionary tale merge.

Fortunately, destabilization isn’t a problem for counties with the local option sales tax. But that’s because the local option sales tax wasn’t set up in the same way that the property tax/sales tax swaps are being proposed. Instead, the sales tax helps counties diversify their tax base, to make it more able to withstand changes to the economy.

When voters approve the local option sales tax, their property tax rate isn’t actually lowered. Their tax bill is calculated as if the sales tax was not collected. The money collected from the local sales tax is then divided by all the taxpayers in the county (hence, the need for tax collections to rise with the population), and that amount is subtracted from tax bills. If sales tax revenue doesn’t come in as expected, the reduction is simply less, and thus property taxes are higher. So government funding continues at the current level.

For the most part, the property tax/sales tax swaps being considered by the Legislature work in just the opposite way: They force us to rely more heavily on the sales tax. And as Pickens County residents are discovering, the sales tax does not always grow as much as you would like for it to.

What would happen in Pickens County if officials didn’t have the property tax to fall back on? Officials would have to slash the budget for the sheriff’s department and the city police departments and the sanitation department and the schools. In short, they would have to do what school officials — and perhaps even county officials — across the state would have to do in a similar economy if the Legislature passed these tax swap proposals without giving local governments any way to offset the revenue losses.

That’s not to say we must abandon the idea of reducing the property tax burden in return for increasing the sales tax rate. It’s simply to say that any plan to do that needs to also build in some components to rebalance the overall tax system, so we don’t find ourselves in a fix when sales tax revenues slump — as most serious economists will tell you they will do over time as a result of Internet commerce and the shift to a service economy.

School finance officers have tried to address this problem with their own plan, which would increase the sales tax and roll back school property taxes, but not eliminate them. Another approach, which I’m not aware of anyone having proposed, would be to eliminate school property taxes but allow the counties to re-institute them any time the Legislature did not increase school funding at the rate of inflation. If the Legislature made up the difference the next year, the property tax would go away; if it didn’t the tax would stay. This has the added advantage of giving schools an out in the event that legislators simply decide it isn’t important to keep funding them.

No doubt there are other ways to keep the tax system from becoming destabilized. The challenge as we go forward with this debate will be to find the best method available, because balance is an issue we cannot ignore.

Ms. Scoppe can be reached at cscoppe@thestate.com or at (803) 771-8571.