COLUMBIA - A Senate subcommittee on Thursday rejected efforts to roll back property tax assessments after realizing the proposal would hit most homeowners with a tax increase.

Bill Gillespie, the state's chief economist, said the idea would shift taxes "from the Battery to North Charleston, for example."

The rollback measure is part of a Senate bill that would make the so-called point-of-sale the default system statewide. Under that system, property would be reassessed only when sold, transferred or substantially improved.

The Senate proposal, crafted after months of meetings, also seeks to roll back reassessed values to 2004 or earlier. Senators wanted to give tax relief to homeowners who went through reassessment last year and saw their property taxes skyrocket - the impetus of this year's drive for property tax reform.

But the rollback also included a clause for local governments, allowing them to increase the tax rate so they wouldn't lose money. That increase would help owners of high-value property but hurt the average homeowner, state and county officials told the subcommittee.

"It's really good we caught that, but I'm very disappointed. When my auditor and assessor explained to us what would happen, I got a great deal of heartburn. We can't sell that as relief," said Sen. Larry Martin, R-Pickens, chairman of the Judiciary Subcommittee on the Property Tax Assessment Reform Act.

Statewide, a reassessment rollback would decrease local government revenue by $552 million, taking $183 million from owner-occupied homes and $369 million from commercial and rental properties. The corresponding tax rate increase needed to recoup that would shift $106 million worth of taxes from top-value homes to the rest, Gillespie said.

"We don't want a situation where none of the relief goes to those who need it most," said Sen. Jim Ritchie, R-Spartanburg.

Martin said the only way to ensure a tax shift doesn't occur would be to prevent local government from recouping the lost revenue, and "that would truly be an assault on home rule."

Subcommittee members said they still want to throw homeowners a lifeline.

Assuming the General Assembly approves a change in the reassessment system, the constitutional amendment would still require voter approval, so nothing would change this year.

"Gentrification has reached all levels of society on the coast," said Sen. Chip Campsen, R-Isle of Palms. "We need to come up with something else."
 
The subcommittee directed Gillespie to research what it would cost to give tax credits to homeowners who saw their property values jump by 50 percent, 100 percent, 150 percent or 200 percent.

The reassessment change is one part of the General Assembly's two-prong plan to reform property taxes. The other part, headed to the House Ways and Means Committee, would swap property taxes on owner-occupied homes for an increase in the sales tax.

Martin said it's important that the reassessment part stand on its own.

"We must work out a plan that will work even if the tax swap doesn't go through," Martin said. "We want to provide optimum relief going forward."

The Senate subcommittee will meet again Wednesday.