South Carolina Supreme Court
Land-tax caps struck down
The South Carolina Supreme Court has struck down a state law
allowing counties to cap the maximum increase when land is
reappraised for taxes.
The court’s unanimous opinion said locally-imposed property tax
relief violated a state constitutional requirement for “statewide
uniformity.”
Local government officials have been watching the case closely
since the suit was filed in 2003 because of the profound effect the
decision would have.
The case arose from a 2002 Charleston County decision to cap
property value increases at 15 percent during any five-year
reassessment period. The city of North Charleston filed suit,
challenging the law’s constitutionality.
Charleston is the only city in the state that acted to cap
property taxes under the state law.
Coastal counties argued that the large property value increases —
and usually higher tax bills — were unfair to homeowners. Others,
including the state municipal association and the South Carolina
Chamber of Commerce, argued caps shift the tax burden to other
taxpayers.
“No two houses would be appraised equally,” Lexington County
assessor Rick Dolan said. “It would end up pitting neighbor against
neighbor.”
Because state law mandates that revenue — the total taxes
collected — remain constant after reassessment, if the county were
to collect less money from one homeowner, it would have to collect
more from other property owners.
Capping property values would make buying a home more expensive
in the long run, Dolan said, because long-time homeowners would not
be paying taxes based on the full market rate of their homes.
Charleston County Council chairman Leon Stavrinakis was
disappointed by the decision.
“This is just a ridiculous system,” Stavrinakis said. “You have
no limit on the potential increase a person could face.”
Stavrinakis disputed the notion that caps pass the tax burden
from the wealthy to the poor. Redevelopment, he said, could increase
property values in poorer areas.
While the court’s decision overturns county-imposed caps, there
was no ruling on the constitutionality of statewide caps.
In December, Gov. Mark Sanford vetoed a bill imposing a 20
percent cap on increases statewide. In his veto message, Sanford
questioned whether the bill violated the state constitution.
The 20 percent statewide cap would have shifted more than $460
million among taxpayers, Richland County assessor John Cloyd
said.
North Charleston attorney J. Brady Hair argued in court that
reassessment caps of any kind are unconstitutional because they
violate the state and federal equal protection clause. Any cap, he
said, would require a constitutional amendment.
The court did not rule on either of those issues, and Hair said
the Legislature could pass another statewide cap.
The decision “leaves the door open,” he said.
Stavrinakis said Charleston County would likely wait on reform
from the Legislature. He had wanted a statewide cap written as a
constitutional amendment.
“We’re kind of at a loss as to where to go,” he said of property
tax reform. “Sooner or later, there’s going to be an uproar.”
Reach O’Connor at (803) 771-8435 or johnoconnor@thestate.com.
