Proposal asks state to use inflation to cap assessment increase
With criticism mounting against the leading property tax reform plans under
consideration in the General Assembly, Charleston Mayor Joe Riley is
entering the fray with a legislative proposal of his own.
Riley said state lawmakers could use his plan to balance the interests of
residential and commercial property owners, and resolve some concerns about
inequity. He promised such a plan Tuesday, in his State of the City address.
The mayor said he thinks the current proposals before the state House and
Senate, aimed at reducing taxes on residential property in exchange for
higher sales taxes, are unlikely to pass because of opposition from the
state Chamber of Commerce and other opponents. The business group has argued
that the leading plans would shift taxes to businesses and to people with
lower incomes.
Those plans are due for debate this week in the General Assembly. On
Tuesday, the House Ways and Means Committee will consider legislation to
change the way property is valued, and legislation to cut property taxes
while raising the sales tax. The Senate Judiciary subcommittee takes up
Senate reform plans Wednesday.
Both the House and Senate plans would cut the property tax on residential
property, raise the statewide sales tax by two cents on the dollar to make
up the lost revenue, and roll back or limit assessment increases. In recent
weeks the Chamber of Commerce and the South Carolina League of Women Voters
have come out against the plans, which are opposed by most school districts
as well, and have offered plans of their own.
Riley's proposed solution, similar to one he championed without success 10
years ago, would use a measure of inflation to cap assessment increases for
all types of property, which would require a constitutional change.
"I'm looking at the problem of getting something passed," said Riley, who is
a former state representative. "I think that by including all real estate,
the business community would hopefully come on board."
He also suggested some school taxes could be replaced by a one-cent sales
tax increase, just as cities and counties used the one-cent Local Option
Sales Tax to reduce property taxes.
Some of the loudest calls to change the way property is taxed have been
coming from Charleston, where fast-rising real estate values have caused
some tax bills to soar. In Charleston County, one of every 25 residential
properties is now valued at $1 million or more, a recent analysis of
assessment records concluded.
"Reassessment is substantially the problem, along with school districts not
having many other sources of income," Riley said.
He said his plan, which is still being drafted, would put a ceiling on how
much assessments could rise when property is reassessed, tied to the cost of
living.
For example, in Charleston County's 2005 reassessment, the average
residential property value increased by 51 percent. Under Riley's plan, no
property assessment could have increased more than 51 percent, plus the cost
of living since the reassessment five years earlier.
While such a plan would transfer some of the tax burden from properties that
gained the most in value since the last reassessment to those that lagged
behind, it would prevent taxes from suddenly doubling or tripling on some
properties, as they have recently.
The General Assembly has been considering a constitutional amendment that
would change the way property is valued, with assessments rising only when
properties are sold or substantially improved. Riley considers such a system
unfair.
"A young couple buying their first home could wind up paying more than
someone who has lived there a long time," he said. "The last thing we want
to do is make it harder for first-time homebuyers to afford a home."
Riley's prior attempt to get the General Assembly to limit assessment
increases resulted in a bill sponsored by Rep. Chip Limehouse, R-Charleston,
and eight other members of the Charleston County House delegation, which
died in committee in 1998.
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