State senators got an earful last week about property taxes, and some of it
wasn’t the usual griping they hear from their constituents. In fact, if the
senators were paying attention, they learned that property taxes pay for the
local services that constituents not only need, but also demand.
To the
Senate’s credit, it has formed the Joint Senate Judiciary and Finance
Subcommittees on Property Tax Reform, and those joint subcommittees have been
conducting hearings this summer throughout the state. Both the Senate and House
are considering substantive changes next year to the property tax system, and
they should proceed with great caution. If they don’t, they could damage the
ability of local governments to pay for police and fire protection, for
emergency medical services, for garbage collection and road maintenance, and for
local schools.
And if the solution is the one favored by some
legislators — a statewide sales tax that replaces the property tax — the cure
could end up being worse than the problem. A statewide sales tax could weaken
the grip local governments have on their own funding source, and in doing so
could put even more power in the hands of state legislators who are far removed
from local problems. Taken to the extreme, this solution could have local
residents begging state legislators — not their city or county councils — to
fund more police officers or buy new fire trucks. Such a change would do to
local governments what termites do to a home — quietly and quickly, the
foundation would be eaten away.
A problem often cited about property
taxes is that in some rapidly growing areas, the tax rises significantly on the
homes of people who have modest or fixed incomes. In those cases, the homeowners
are paying taxes on paper wealth — money that won’t materialize until they move
or die. One solution cited in Greenville and at other hearings is to consider
circuit breakers on homeowners of limited means — not the wholesale exemptions
for all elderly people, some of whom have greater discretionary income than
young families.
Local government leaders also told state senators some
of the things they can do to help without eliminating the property tax system:
(1) The state could take over a greater share of funding public education. (2)
The state could give local governments, especially cities, more ways to raise
revenue. (3) The state could give local governments more flexibility with some
of the resources they now have, such as the accommodations tax or hospitality
tax.
One of the citizens who spoke against reducing property taxes was
Ronald Sobczak, who told the Senate panel, “I’m here to tell you that although
you have reduced my taxes every way you can, my demand for services from the
state has not been reduced.” That’s something for legislators to chew for a few
months.