Posted on Tue, Mar. 01, 2005


Reassessment vital to attractive local communities



THIS AFTERNOON, the House steps back into the property tax debate, when a subcommittee takes up a bill to do to South Carolina what the infamous Proposition 13 did to California nearly three decades ago — make it politically impossible for cities and counties to provide the garbage, police, fire and other basic services that growing populations demand.

The bill, based on the California law, is the latest clumsy attempt to deal with the property tax problem some homeowners face when reassessments cause the value of their homes to go up faster than their incomes. It would do away with routine reassessment and update property values only when property is sold.

That may sound fair and reasonable. It’s not.

Local governments levy property taxes in part because most of the services they provide, from police protection to zoning to schools, affect the value of property: The better those services, the more buyers are willing to pay for the property. Reassessment maintains this correlation by allowing property tax collections to grow with the economy — in the same way that rising wages allow income tax collections to grow, and inflation allows sales tax collections to grow. Eliminating reassessment is like replacing the 5 percent sales tax with a flat nickel tax on every head of lettuce, gallon of milk or pair of shoes, even as the price goes up.

If you eliminate routine reassessment, the government has to increase the tax rate in order to keep pace with inflation. And governments are hesitant to do that. So they cut back on those services that make our property more valuable, and our lives better.

There are better ways to deal with the problem that reassessment causes some homeowners.

The simplest, which will be considered today by House and Senate panels, would make it easier for people who have paid their mortgages to pay their property taxes. Two bills would let counties set up monthly payment schedules for property taxes to help people who don’t pay their taxes as part of their monthly mortgage payments; one would require counties to accept quarterly payments. We see no reason why the monthly option shouldn’t be available. And while we’re not crazy about the state telling local governments how to do their business, requiring the quarterly option strikes us as a reasonable demand.

But the biggest problem with property taxes is not the way they are assessed or collected; it’s that local governments rely so heavily on them. So the solution to onerous property taxes must involve expanding local taxing options, or reducing local revenue needs.

Unfortunately, the Legislature keeps doing just the opposite. Several bills would limit how local governments can use the limited menu of taxing options they have. And the governor is pushing to reduce the top income tax rate, which, at least in the short term, will reduce the amount of money the state has to spend. If the last few years are any guide, the Legislature will respond to that by making cuts that either reduce the amount of money going to local governments or increase the amount of work they have to do, or both. So local governments will be forced to raise property taxes just to keep offering the same level of service.

That brings us full circle: If the Legislature eliminates reassessment, cities and counties won’t be politically able to raise property taxes enough to make up for those losses, so we can count on local cuts that will result in communities where few of us would want to live.





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