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Senator proposes property-tax plan

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State Sen. Scott Richardson has proposed a new direction for property-tax reform, halving a significant sales-tax hike approved by the House last month and focusing on relieving school taxes on primary residences and personal property.

After a Senate subcommittee abandoned the House's 2 percent sales-tax plan to replace most property taxes, Richardson, R-Hilton Head Island, proposed a 1 percent plan Thursday in Columbia. The proposal increases a tax cut on school-operating costs for all owner-occupied homes and helps pay the tax bills for homeowners most in need of relief.

Expected to collect more than $650 million annually, the plan includes easy-to-implementreforms that are equitable statewide, Richardson said.

"We need to get something out of committee that's not going to be a train wreck," Richardson said.

The new proposal satisfies county officials worried that reforms would miss the mark.

"The whole thing comes down to school funding," said County Council Vice Chairman Skeet Von Harten. "We have to address schools first."

Under the plan, about $166 million would be used to expand the state's exemption for school-operating taxes from the first $100,000 of a home's value to the first $300,000. The exemption would provide limited tax relief to all owner-occupied homes and eliminate the school-operating taxes on any home worth $300,000 or less.

"You don't have to reinvent the wheel on this," Richardson said of the plan as it compares to other proposals.

About $323 million of the collections would cover eliminating school operations from tax bills on personal property, including boats and cars.

The sales-tax revenues also would cover about $104 million available to homeowners paying more than 5 percent of their adjusted gross income on property taxes. That would mean that a homeowner making $30,000 a year would receive a state credit for any portion of his tax bill over $1,500.

Richardson said the committee hasn't determined how the credit will be applied but suggested that it might come through an income tax credit or a state application process.

The General Assembly has been debating various forms of property-tax relief since last summer. The House approved a tax plan last month that would replace almost all local property taxes with an increase in the state sales tax from 5 percent to 7 percent. But the state estimates the plan would come in more than $100 million over budget.

After batting around similar increases to replace school taxes, a Senate subcommittee sought less expansive options.

Late last month, county officials fretted over a Senate Finance Committee plan that would have created a tax exemption on county property taxes instead of the school-exemption increase. The new proposal pulls counties from the equation, Richardson said Friday.

"I have a philosophical problem with telling counties how to do their business," he said.

Von Harten said the legislature still must address a state mandate that school budgets increase annually based on an inflation-driven formula.

"You ought to have to show the need and earn your increase," he said.

Contact Greg Hambrick at 986-5548 or . To comment on this story, please go to beaufortgazette.com.