COLUMBIA, S.C. - The state Supreme Court heard arguments Thursday in a case that could affect how city and county governments figure tax rates following periodic reassessments of property values.

Attorneys for a former Horry County administrator told the high court that the city of Myrtle Beach failed to follow steps required by state law for determining how much to charge in property taxes after reassessing property values in 1999. Attorneys are seeking a refund of the excess charges, which they say could equal about $2.4 million.

State law says when property is revalued, governments must roll back their tax rates so they collect close to the same amount of money they received before the reassessment. The other option is to declare a tax increase and follow the required steps including advertisement and public hearings.

Instead of rolling back tax rates using the formula determined by the General Assembly, the city hired auditors who determined a rate that would get city about the same amount in property taxes they had received the previous year. The state Department of Revenue signed off on the calculations done by auditors.

Circuit Judge Michael Baxley found in October 2002 that the city did nothing wrong in its calculations. Linda Angus, who was fired as Horry County's administrator in 1999, appealed that ruling to the state high court.

Chief Justice Jean Toal said Thursday legislators laid out "clear, bright-line" standards for calculating the correct tax rate and whether the state Revenue Department agreed with the city's method is irrelevant.

Allowing a city government to use its own logic rather than that laid out by legislators could lead to governments making money off taxpayers after property reassessment, said Nate Fata, who is representing Angus.

Associate Justice Costa Pleicones agreed. "In the hands of an irresponsible municipality, your (method) leads to backdoor increases," Pleicones told Charles Jordan, an attorney representing the city.

In briefs filed with the high court, the city says its method resulted in the collection of nearly $500,000 in excess money that it offered to refund by reducing the property tax rate the following year.

But Angus' attorneys say giving back a refund the following year would not be fair because the group of taxpayers changes from year to year.

Toal compared it to being overtaxed by the Internal Revenue Service. The IRS can't repay one person who was overtaxed by spreading the refund among a different group of taxpayers in another year.

The city argued that if it had followed the method Angus said should have been used for determining the tax rate, the city would have had to write an operating budget in the red. The city, like most governments, must write its budget each year based on tax estimates rather than hard numbers from the previous year.

The city has no plans to change its calculations for the coming year. The city also is appealing the lower court's decision to make Angus' case a class action suit.

If the case continues as a class action and a court decides that refunds must be given to taxpayers, current taxpayers are the ones who would be hurt and only those who have left the city would benefit, Myrtle Beach attorney Jordan said.

Money for refunds can only come from two places: a tax increase on Myrtle Beach residents or cuts to city services, he said.