COLUMBIA, S.C. - State senators studying
property tax relief decided Tuesday to draft a bill that would
eliminate personal property taxes for school operating costs by
increasing the state sales tax by 2 cents.
The proposal would cut property taxes in half for the average
homeowner, and rank South Carolina's property taxes among the lowest
in the nation. Senators chose to cut property taxes for people who
own and rent their homes, people who own a second home they don't
rent, vehicles, and other personal property such as boats.
Shifting those school operating costs to the state would add $906
million to the state budget. Increasing the state sales tax to 7
percent, except on food, would pay for that, plus raise about $120
million more. Sen. Hugh Leatherman, R-Florence, said the excess
would go into a reserve fund in case of economic downturns.
"I feel strongly that we need a cushion," said Leatherman,
chairman of the Senate's finance committee.
All but one member of the joint Senate finance and judiciary
subcommittee agreed the bill should eliminate personal property
taxes for school operations, and do so with the 2-cent sales tax
increase.
Only a few of the 12 subcommittee members wanted to go further to
eliminate personal property taxes that fund county and municipal
operations.
"Our starting point needs to be making sure people can afford to
own their homes," said Senate President Pro Tem Glenn McConnell, one
of those who wanted to reduce property taxes further. "I wish we'd
gone across the board. But that's a big chunk of it out of the
way."
He said he wants to somehow extend a "lifeboat" to residents who
must pay their property tax bills before the General Assembly votes
on legislation.
Eliminating all property taxes - school, county and municipal
operations and debt service for all individuals and businesses -
would cost the state $4.2 billion, according to state projections.
That would require raising the state sales tax by 9 cents, to 14
cents for every dollar sold.
Since the bill to-be-drafted would not address county and
municipal operating costs, senators said they want to make sure
those entities don't raise property taxes and gobble up intended tax
relief. Senators discussed allowing entities, including school
districts, to raise taxes only if voters approve it in a
referendum.
The Senators also voted to pursue legislation that allows each
county to choose how to handle reassessment. Options would range
from keeping the current system to reassessing homes only when
they're sold or substantially added on to.
Residents attending the standing-room-only meeting who hoped for
complete elimination of property taxes were not happy with the
senators' votes.
"I believe they're going to overcomplicate the issue so much,
we're going to end up going backward instead of forward," said Dan
Harvell, of S.C. No Tax and chairman of the Anderson County
Taxpayers' Association. "I see this process as watering it
down."
His groups believe property tax relief must include eliminating
local taxes paid for school construction. McConnell said the problem
with addressing school debt is that it would require a
constitutional amendment.
The Senate subcommittees will next meet at 1 p.m. Nov. 7. State
House members are also studying property tax relief.
