Property tax relief in danger

Senate on verge of reducing likelihood all homeowners will see bills decrease

By JOHN O’CONNOR

johnoconnor@thestate.com

Senators are poised to take a strong step away from a House property tax relief plan today — a move that might make it less likely the Legislature will reduce the tax bill of every homeowner.

A slimmed-down plan that cuts taxes according to a homeowner’s ability to pay is emerging as an option for a Senate subcommittee working on tax relief.

The plan, nicknamed a “circuit breaker,” would pay a portion of a homeowner’s tax bill if the bill reaches a certain percentage of the homeowner’s income. The Legislature will determine that percentage.

Details have not been worked out. And a handful of other choices, including swapping an increased sales tax for reduced tax bills and increasing the amount of a home’s value exempted from taxes, also are on the table.

The subcommittee has set this week as the deadline for approving a plan. So, today’s meeting is likely to set a new course in the debate that has been simmering since last fall.

The stakes are high. And time is tight. The legislative session hits the halfway mark at the end of this week.

Tax reform might not happen “if we don’t have a pretty good idea where we’re going by Tuesday afternoon,” said Sen. Scott Richardson, R-Beaufort.

Even so, the House has rejected most options the Senate is considering, leaving doubts as to whether the two bodies can compromise on a plan.

Subcommittee members said there still is little agreement about what form the plan might take, though two options have been eliminated:

• The House plan to replace school and county operating taxes homeowners pay with a 2-cents-on-the-dollar increase in the state sales tax. The panel has never embraced that approach.

• A $2.4 billion plan to remove school taxes from all property. The Senate subcommittee heard from businesses about concerns on property taxes before concluding a broad swap for sales taxes would be too expensive.

Instead, senators are looking at simpler ideas, such as the “circuit breaker.”

The cost of a circuit breaker is not clear. State Sen. John Land, D-Clarendon, said it could cost the state about $25 million a year.

The break in taxes, as well as how income would relate to tax bills, has yet to be determined.

Another option would double the current tax relief on homes to make the first $200,000 of a home’s value exempt from school taxes.

Lawmakers said they were surprised how difficult it is to spread relief equally. Figuring out a way to distribute money to school districts remains a key stumbling block.

“Somebody’s ox is going to be gored,” said Sen. Robert Hayes, R-York. “Either the fast-growing districts or the poor districts.”

While the panel is expected to outline a path today, Land said it could be difficult to fully iron out the issues this week.

“I kind of doubt it,” he said of the subcommittee approving an option, “unless something else is offered.”

Reach O’Connor at (803) 771-8358.

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