Property tax relief approved by the legislature last week won't show up on tax bills until 2008 but could more than wipe away anticipated tax hikes for residents due to a shortfall in state education dollars.

The plan swaps property taxes on owner-occupied homes used to pay for school operations with a 1-cent increase in the state sales tax beginning June 1, 2007 -- raising the sales tax to 6 cents. The governor is expected to receive the legislation this week and will have five days to approve it.

Beaufort County Council Chairman Weston Newton said Tuesday that the county is trying to determine the fiscal impact of the property tax relief bill.

"The devil is in the details," he said. "Potentially, this is tremendous news for Beaufort County."

While Newton had hoped the relief would replace the millions lost for education this year because of state funding formulas tied to property values, the changes won't take effect until tax bills are sent out in October 2007.

For that tax year, the school district would be reimbursed dollar for dollar for the taxes expected to be collected from owner-occupied homes, said Bill Gillespie, the state's chief economist with the Board of Economic Advisors.

Although a home assessed at $200,000 is expected to see a $110 increase in property taxes this year to support schools, those residents would see a reduction in the following year's tax bill of $432.

The Board of Economic Advisors has estimated that Beaufort County would receive $23.6 million beginning January 2008 to replace those property tax dollars, Gillespie said. But that number would increase because this year's tax hike had not been factored into estimates, he said.

Jasper County, which is projected to need only $1.37 million to cover the taxes collected on owner-occupied homes, will receive the $2.5 million minimum included in the state bill.

The money doled out to school districts for the 2008 fiscal year will be considered a base that can't be reduced, with future funding tied to inflation and increases in the district's weighted pupil units, a state estimate that includes increases in student population that adds weight for students with special needs.

That increase also would include a poverty factor that legislators say may benefit Beaufort County, which has about 50 percent of its students on reduced or free lunch, a factor in the poverty index.

"In the long term, it's going to be better for us," said state Sen. Scott Richardson, R-Hilton Head Island.

Statewide, the added penny on the sales tax would collect $582 million in the first year, but only $527 million of that would be needed for school districts. Any remaining balance would be disbursed to counties based on population to use for additional tax relief.

The tax swap plan also includes a tax hike cap beginning with 2008 budgets limiting local tax increases to inflationary factors and population growth, except in specific cases of hardship, including hurricanes or the loss of large industries.

There are questions still about how that allowed growth will be determined, said County Controller Tom Henrikson.

The inflationary portion, based on the national Consumer Price Index, would be the same statewide, potentially ignoring local factors that could make inflation climb faster in Beaufort than Bamberg.

It also has not been determined how the Board of Economic Advisors will determine population increases for counties, municipalities and school districts.

With caps not effective until budget years beginning July 1, 2007, the state should have time to work out concerns, Henrikson said.

The tax reform plan also includes:

An additional 1-cent increase option for counties to further reduce property tax bills for all property that would require voter approval;

A reduction of the sales tax on food and accommodations from 5 cents to 3 cents; and

A 15 percent cap on reassessments that also would have to be approved by voters in November.