Myrtle Beach used illegal methods to calculate property taxes in 1998, the state Supreme Court ruled Monday in a five-year-old case filed by former Horry County Administrator Linda Angus.

The 3-2 ruling almost brings to an end the dispute about tax calculations that began with the 1998 countywide reassessment, but it could have an effect on how cities and counties statewide figure their taxes.

The court sent the case back to the lower courts to determine how to repay the overcharge.

But it already has been paid, Myrtle Beach spokesman Mark Kruea.

The city refunded the $500,000 overcharge to taxpayers the next year, he said.

"It's a disappointing decision," Kruea said. "The high court was split 3-2, and we'll certainly ask for a rehearing."

The lawsuit by Angus, who lived in the city, began with tax calculations after the 1998 reassessment. State law does not allow local governments to get a windfall from rising property values, so they must readjust their tax rates.

In setting its rates, the city estimated it would receive 86 percent of the tax payments because some people do not pay.

Instead, the city received 88 percent of the levy.

The city said it was acting on the advice of the state Department of Revenue and doing what most cities and counties do to develop a budget. Taxes never come in at a 100 percent level, the city said.

The Supreme Court decision, written by Associate Justice James Moore, said the city could have held a hearing and voted to raise taxes, but it did not.

The lower court was wrong to say the city's actions were reasonable, the opinion said.

"The variables permitted by the statute are clear and unambiguous; regardless of the merit of Myrtle Beach's formula, it is not what the statute allows," the court wrote.

In a dissenting opinion, Associate Justice Costa Pleicones said, "The reality of municipal budgeting is that it is an inexact science, relying as it must upon estimates and 'best guesses.'"

Kruea said that if cities and counties must calculate taxes as if 100 percent will be paid, they will be forced to raise millage rates and collect more than they need to be sure to bring in enough to cover the budget.

They would have to repay any overcharge the next year.

"It really puts budgeting in an up-and-down roller coaster," Kruea said.

He also said that because the city already paid the money back, he isn't sure what a hearing on that issue will accomplish.

Lawyers for Angus could not be reached, nor could a spokesman for the S.C. Municipal Association.

The state Supreme Court ruled Monday in a five-year-old case filed by former Horry County Administrator Linda Angus that Myrtle Beach used illegal methods to calculate property taxes in 1998.