Posted on Thu, Apr. 20, 2006

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Senate to debate new plan for tax relief

By Zane Wilson

The Sun News

COLUMBIA - An increase of less than half a penny in sales taxes would ease property taxes on homes in Horry County under a plan the Senate began reviewing Wednesday night.

A little over a penny would do the same for Georgetown County.

Debate, and probably a vote, is expected on the proposal today.

It is a substitute for the plan passed by the House that imposes an additional 2 cents of sales tax statewide and uses the 7 cents of sales tax to replace property taxes for operations of schools, cities and counties.

The proposal is a local option, meaning voters in each county would be asked to approve it before it would go into effect. The plan is similar to the existing local-option sales tax to pay for some county taxes.

Both Horry and Georgetown counties have rejected the local-option sales tax in the past.

But supporters think voters will bite this time.

"It preserves home rule, and it's a home run for Horry and Georgetown and Charleston counties," said Sen. Ray Cleary, R-Murrells Inlet.

Sen. Dick Elliott, D-North Myrtle Beach, said he was not so sure.

"They just don't like sales tax in Horry County," Elliott said.

The sponsors removed a provision in the original version that allowed voters to use the sales tax to lift school debt as well as operating funds.

A penny of sales tax would have more than covered all the school taxes in Horry County under the earlier version.

Cleary said the real estate industry persuaded sponsors to remove that provision. The real estate brokers feared it would cause a spike in house prices.

But Cleary said that ignored the larger picture. Home buyers in places such as Horry County would benefit from long-term lower taxes even if they had a slightly higher purchase price, he said.

The plan came late in the day after the Senate defeated other proposals, including the House plan.

Sen. Jake Knotts, R-West Columbia, pushed for approval of the House plan after other proposals failed to get a majority. Although senators don't usually like House proposals, "even a blind pig can find an acorn sometimes," Knotts said.

Many members said they did not like the House plan because it takes local money and redistributes it to the local governments. They also did not like the redistribution formulas in which some school districts would get more than others.

Those concerns were one reason Sen. Chip Campsen, R-Isle of Palms, came up with the local-option proposal, he said.

"I would rather have a statewide solution," Campsen said. But it appears the Senate can't agree on one.

One reason for the lack of agreement is that "the property tax problem is largely not a statewide problem," he said.

It is more prevalent in fast-growing areas such as coastal Horry and Georgetown counties, where property values have surged.

The school funding problem is another that the Senate could not seem to solve, Campsen said. So "instead of going home with nothing," the local option plan offers a way for local property tax relief, decided by each county, he said.