May 9, 2004
cap bill may cause class warfare
SC Statehouse Report
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.
WORLD: When the cows come home to moo
Winners and losers of the past week
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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
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 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: When the cows come home to moo
This week's cartoon by our Bill McLemore:
SOUTH CAROLINA SCORECARD
Here's a "thumbs up" and "thumbs down" related to various
political events from the past week:
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
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.
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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