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. |