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Article published Dec 18, 2004
Sanford vetoes property tax cap bill

AMY GEIER EDGAR
Associated Press

COLUMBIA -- Gov. Mark Sanford vetoed a bill Friday that would have limited how much property tax values can increase during reassessments.Sanford said the bill, which would have imposed a 20 percent cap on increases in property values on homes and businesses for tax purposes, is unconstitutional because it doesn't tax property based on fair market value.The bill was intended to help people who have seen their properties skyrocket in value avoid drastically higher property taxes.State Rep. Vida Miller, D-Pawleys Island, sponsored the bill. She has said some in her coastal district have seen property values more than double in the reassessments done every five years by counties, forcing some of her constituents out of their homes.Sanford, however, said the bill allows property owners who have seen large increases in property value to pay property taxes based on less than the property's fair market value.In his veto message, the governor said the only way to avoid the requirement that property tax assessments be based on fair market value is by creating a general exemption or homestead exemption.Sanford said he doesn't think the bill was intended to be an exemption from property tax. Even if that were the intention of the Legislature, such an exemption requires a two-thirds vote from members of the House and Senate. This bill passed by a voice vote, he said.In addition, the bill would have caused significant shifts of the distribution of state education funding, Sanford said."The distribution of state education funding would shift from school districts with lower valued property, including the poorest districts in the state, to school districts with higher valued property. This result is contrary to the intent of the Education Finance Act," Sanford wrote in his veto message.The EFA uses a formula to determine how much state money goes to public schools. The formula considers the ability of districts to provide funding on the local level, giving poorerdistricts more state money and wealthier districts less.But Sanford said the bill would have made districts with growing property values appear to be less wealthy and would have resulted in most districts, including poor ones, receiving less state education money.Hunter Howard, president of the state Chamber of Commerce, said he was pleased with the veto. Howard was concerned that wealthier taxpayers would benefit from the cap, leaving businesses and others to pay a larger chunk of a county's tax bill."Everybody is concerned about rising property taxes, but the answer is not to compound the problem by shifting it to another class of taxpayers," Howard said.He would like to see targeted tax relief to people who really need it."People who are being taxed out of their home, there could be a circuit breaker built in that provides relief based upon their levels of income. When their property taxes exceed a certain percentage of their income, then there ought to be relief to those people. But not to people just because they had increases in value," he said.Sanford said he would work with legislators to find other ways to ease the burden on taxpayers. He suggested assessing property at the time of sale, saying it would protect owners who have had properties in their families for years while still meeting the fair market value requirement.House Minority Leader Harry Ott, D-St. Matthews, said he supported the legislation when it came through the House, but after further review, "This is one of those instances where I believe I support the governor."Ott says it appears the bill puts an unfair tax shift onto lower income properties, which was not the intention. He says he supports alternatives such as increasing sales taxes and reducing property taxes, with education funding coming from sales taxes as opposed to property taxes.House Speaker David Wilkins said Sanford's veto sends lawmakers back to square one on their efforts to cut property taxes."I understand his reasoning, but this is still the most egregious tax the citizens in South Carolina face," said Wilkins, R-Greenville.