Ballot 4 could lead to tax hike

ROBERT W. DALTON, Staff Writer

Many South Carolinians will give themselves a tax increase if they approve a constitutional amendment that caps the rate at which home values can increase, according to Spartanburg County officials and a Clemson University economist.

"We definitely have some concerns about it," Spartanburg County Administrator Glenn Breed said. "I think a pretty significant number will see a property tax increase."

The amendment asks voters to decide whether assessment increases should be limited to 15 percent over five years. It is part of a property tax reform package the state Legislature approved earlier this year.

The Municipal Association of South Carolina says that two-thirds of the state's taxpayers would see a tax increase if voters approve the proposal.

Holley Ulbrich, a senior fellow at Clemson University's Strom Thurmond Institute, said that people who live in areas where home values are appreciating rapidly would benefit from such a cap. Others, she said, would be asked to pay more to finance the tax break those residents would receive.

"People who live along the coast, in the mountains, around lakes or in areas with higher income growth will benefit," Ulbrich said.

For example, Spartanburg County will collect $43.9 million from property taxes to fund its 2006-07 budget. If the tax value of a $200,000 house in a rapidly appreciating area increases by 50 percent, it's now a $300,000 house. But if the 15 percent cap is in place, its new tax value is only $230,000.

Spartanburg County still could collect $43.9 million, but it would be achieved through a higher millage.

"In order to get the same revenue, there would be a redistribution (of the tax burden)," Spartanburg County Assessor Gil Bulman said. "Whether it's another house, a vehicle, agricultural property or a manufacturing company, some people would pay more."

Bulman said it is unclear how much of a shift there would be in Spartanburg County. But in 2004, the Legislature approved legislation instituting a 20 percent cap -- which Gov. Mark

Sanford vetoed -- and Bulman said projections showed it would have cost the county $3.3 million.

The amendment also calls for property to be assessed at fair market value when it is sold. Ulbrich said this provision could create a situation in which people who live side-by-side in similar homes could see wildly different tax bills.

"Over time, you're going to have very unequal assessments on property based on how recently a property was sold," she said. "It benefits people who don't move very much."

State Sen. Larry Martin, R-Pickens, who helped craft the property tax relief package, disputes the Municipal Association's numbers.

Martin said he concedes that a 15 percent cap would not be fair for everyone. But he said assessing homes at fair market value is not fair for everyone, either.

"We grappled with what to do, and this seemed to be the way to get an incremental yet stable increase over time," Martin said. "This seemed to us to be a reasonable hybrid between those who advocated for no increase and those who said fair market value was the way to go."

Robert W. Dalton can be reached at 562-7274 or bob.dalton@shj.com.