S.C. Statehouse Report
May 9, 2004
VIEW: http://www.statehousereport.com/columns/04.0509_property.htm

COMMENTARY
Property tax cap bill may cause class warfare
By Andy Brack
SC Statehouse Report

MAY 9 , 2004 - - One of the buzzwords for modern-day economic politics is "growth." In myriad debates, state and federal politicians push for growth to boost revenues so they don't have to raise taxes. "We'll grow out of" __________ (insert appropriate public policy problem.)

But that apparently goes out the window when it comes to clarion calls for lower property taxes. You don't hear the old growth argument with property taxes because they're directly tied to growth and value of property holdings.

Generally speaking, the simple formula for figuring property taxes is: assessed value of property times tax rate equals your property tax bill.

To translate, as your property value goes up (growth) at reassessment, communities can keep the tax rate at the same level. The growth, however, increases the amount of money government receives to do business.

If, however, something artificially constrains the assessed value part of the formula and everything else remains the same, local governments have to raise millage (the tax rate) to generate the same amount of money. Like a balloon, if somebody constricts part of the revenue formula, the other part tends to bulge.

With increasing unfunded state and federal mandates, local governments often find themselves between a rock and a hard place. They have to do more with less. If, for example, they want to keep providing the same level of local services as in the past, they have to raise more money because of all of the new things they're forced to do. Sometimes growth in property values makes up the difference; sometimes not.

But now a move at the Statehouse would constrain local governments from using normal growth to keep tax rates down for everyone.

A bill by Rep. Vida Miller, D-Pawleys Island, calls for a mandatory 15 percent cap on increases in the fair market value of people's homes. A similar bill by Rep. Ronnie Townsend, R-Anderson, called for elimination of reassessment. Both bills went to the Senate, which combined them into a mandatory 20 percent cap. The measure likely will be debated soon after the Senate finishes with the budget in the next week or two.

In essence, the effort allows people who have had big increases in the value of their land or property to get a tax subsidy. Under the bill, if a property's value doubled at the next assessment, the owner's tax value could only go up 20 percent. That's good news for rich and poor along the coast where property values have been skyrocketing. It means rich folks will be able to shift part of their taxes to everyone, while poor people who may own land that was passed down for generations likely will be able to keep their land because they'll be able to afford to pay the taxes on it (which they can't when values go through the roof).

But this fiddling with property taxes may cause a consequence that hurts more people than it helps. If growth areas of a community have a property tax cap, there's more pressure for the local government to raise tax rates on everyone just to keep the budget the same.

In other words, a property tax cap could help stabilize bills for people with increasing property values. But if a property increased less than 20 percent, it's likely the owner will shoulder more of a burden if the property tax cap bill passes.

Miller, the author of one of the bills, admits it's not a perfect piece of legislation. She says it's not an effort just to help the rich folks along Pawleys Island where she lives. It's an effort, she says, to help establish some sanity in the tax process so people can afford to keep their homes and not have to move due to whopping increased tax bills.

The S.C. Association of Counties opposes the measure vehemently.

"It's an ugly whipsaw," said assistant director Robert Croom. "You are going to give apparent tax relief on the one hand, but on the back end, you're going to get a spike."

* * *

A couple of weeks ago, we profiled the money behind House races. In general, we found a lot of incumbents who had less than $10,000 in their campaign coffers. But in the Senate as of mid-April, most GOP and Democratic incumbents had healthy balances of more than $20,000. Exceptions included Republican Sens. Danny Verdin ($491.03), Bill Mescher ($752.20) and Greg Ryberg ($1,383.74) and Democratic Sen. John Drummond ($2,437.21). Only Ryberg faces no opposition. For a more in-depth look about Senate campaign accounts, check out our Special Report on money in SC politics.

• 5/9: Special Statehouse Report on Money in SC Politics
• 5/2: Politicians should learn when to keep mouths shut
• 4/25: Money chase not as swift as you may think
• 4/18: State can't afford income tax cut
• 4/11: How SC politics is becoming like modern-day baseball
• 4/4: Stop whining about the filibuster
• 3/28: Tort reform efforts hinge on trust, timing
• 3/21: SC House slams environment repeatedly
• 3/14: Jobs bill veto should not hurt Sanford
• Have a comment? feedback@statehousereport.com

McLEMORE'S WORLD
5/9: When the cows come home to moo

This week's cartoon by our Bill McLemore:

• To send a message to cartoonist Bill McLemore, write info@statehousereport.com
  

SOUTH CAROLINA SCORECARD

Here's a "thumbs up" and "thumbs down" related to various political events from the past week:

Thumbs up

McIntosh. Hats off to former Hodges' staffer Lachlan McIntosh for deciding to run against Rep. George Bailey, the now-Republican lawmaker whose filing shenanigans had him in both parties.

ISG. Keep your fingers crossed that International Steel Group will be able to buy Georgetown Steel and get workers back to work.

Sanford. Congrats to the governor for his push to make SC a more health state through his bike across SC initiative.

Thumbs down

Sanford. But thumbs down for voting against modest cost of living adjustments to SC state retired employees. That's the kind of thing that will be remembered at the polls.

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