Property taxes continue to get attention of legislators and citizens

The last few months have illustrated the problem that we, as a community and state, have with property taxes and their implementation. Re-assessment bills are arriving and in most cases a dramatic increase in the amount of money owed to the government is included. With this article, I am going to try and clarify the current situation and explain the options that are being discussed.

The first point to know is that I am an adamant and ardent opponent of property taxes.

I believe that property taxes are inherently wrong; that they are contrary to the very pursuit of the "American Dream" of homeownership; and that they are often a tax on unrecognized gains. I believe that when implemented fairly, user fees and consumption taxes are far more equitable and reflective of economic wealth and the existing economic vitality of a community.

When I first ran for office, the single most important "plank" in my platform was the elimination of property taxes, and each year I have been persistent in that pursuit. In fact, the legislation that I co-authored, commonly referred to as the "Quinn-Sheheen Plan", was recognized as the single most comprehensive tax reform legislation that has been introduced in recent history.

But not everyone shares my views.

The property tax is the only tax that is expressly referred to in the state constitution. That is why for any meaningful reform one often hears mention of the fact that to change the property tax will require a general election referendum and/or 2/3 vote of both houses of the General Assembly.

The plain truth is that getting 2/3 of the Senate and House to vote favorably on an issue – any issue – is exceedingly difficult. Coastal and Lowcountry legislators have been trying for years to change the property tax system, but the fact is that the state of South Carolina does not collect property taxes and there simply have not been enough votes to force a change. But let me emphasize that point – the state government of South Carolina, over which the General Assembly has direct control, does not implement or receive revenue from property taxes.

Property taxes are the primary method of revenue collection for the cities, counties and – most importantly – the schools in our state.

The initial "problem" is the fact that when bills go out most property owners have sticker shock when seeing in a lump sum format how much is being paid to run government and schools. (Personally, I wish this was done more often with other forms of taxation so a more clear view of what we pay in taxes could be obtained.) Almost every year the property tax goes up because of the growth of government. Sometimes this is warranted because of a growing population and a demand for more services, but often there is an actual decrease in population and the government still continues to grow.

But the biggest jolt comes during re-assessment years. Many local government leaders are fond of saying that they have no control and that the state mandates that they re-assess every five years. That part is true – it is in law that property be re-assessed. However, what they are failing to say is that the reason for re-assessment is to more fairly and evenly distribute the tax burden – especially when there is dramatic growth in an area.

The only reason that taxes should continue to go up in a growth environment is because government and/or school spending continues to grow with it.

Now, the politics of the situation come into play. It obviously takes a great deal of money to run government and our schools. (I personally do not believe it should cost near as much, but that is a discussion for another day.) In our area each of these entities has autonomy – the ability to set their own budget and to raise, or lower, taxes. The problem this creates is that each government entity finds itself only concerned with the level of taxation that it assesses and does not take into account the whole tax burden.

The final result is that taxpayers are finally being hit by all sides and it is giving rise to a firestorm of protest. In other words, government has overplayed its hand.

Currently schools and school bonds account for between 60-70 percent of our property taxes. That revenue is in addition to state and federal funding. It is also important to realize that the massive building program that was implemented (a portion of which was done without voter approval via the new and potentially illegal lease purchase program) is also beginning to be reflected on the tax bills.

On the local government side, the property tax roll back is not providing near enough relief to balance government growth.

So now we need to find solutions.

The first problem will be overcoming opposition by the very groups that are calling for the legislature to do something - the school board association, municipal association and county association lobbyists. (By the way, most of these lobbyists are paid for with our tax dollars.)

The second problem will be finding a fair solution that properly provides revenue to government and school entities while also providing clear accountability for taxation and spending and does not just move the burden to the business community.

Both the House and Senate have appointed committees charged with drawing up legislation to be introduced in January. I am on the House Committee. Between both there are committee meetings and town hall gatherings virtually every week somewhere in the state.

Both the House and Senate are working with a base $.02 increase in the sales tax. In broad terms, the Senate plan is directed at lessening the tax burden on a variety of taxpayer classifications — including owner-occupied homes, personal property such as cars, rental and commercial. They also have caps included to control growth.

The House plan is primarily focused on owner-occupied homes. I firmly believe that if we have an opportunity to completely eliminate a tax, it is better than a reduction that could potentially come back sometime in the future. Our plan would completely eliminate the property tax on owner-occupied, primary residences. The only exception will be where school bonds have been approved by voters and those will be eliminated as the bonds are paid off. Additionally, we will impose caps to protect business and other property tax classifications from unfair growth pressures. We will also work to eliminate the lease-purchase scheme that is currently being used by school boards and which avoids gaining taxpayer approval for tax increases.

However, both of these plans are works in progress and I am absolutely sure that what they presently look like will not be their final composition. But, we are making significant progress.

Combined with a volatile election year, I am cautiously hopeful that a plan can be written and rallied behind which will finally pass constitutional muster and help our state’s residents.

In my next column I will provide an update on how things are progressing.

Thank you for allowing me to represent you and I hope you and your family have a safe week.

Jim Merrill is serving his third term in the SC House of Representatives and is the Majority Leader of the SC House. He can be reached locally at 884-9108 or in Columbia at 803-734-3138. The email address is jm1@scstatehouse.net and mailing address is 514 Blatt Bldg., Columbia, SC 29211.

Islanders organize, meet with political leaders to discuss property taxes

A group of Daniel Island business owners, retirees and residents has been meeting recently with public officials to discuss recent property tax increases as well as how funds are being managed.