Competing plans find mixed support in state Senate
COLUMBIA - To hear Sen. Chip Campsen tell it, the legislative effort to
provide homeowners with property tax relief has hit an iceberg.
"I think this tax plan is sinking like the Titanic," the Charleston
Republican said. "We've hit the iceberg and now the passengers are in the
water. . They are dead and they don't even know it yet."
In this metaphor, the passengers are coastal taxpayers struggling to pay
their escalating property tax bills.
For nearly a year, state lawmakers have pledged to come to the rescue. But
those hopes continued to fade last week as the Senate met for three days
without action.
The problem is that few senators actually like the plan two Senate
committees generated after six weeks of work. And they aren't sold on four
alternatives being considered, either.
The debate resumes Tuesday, and Senate leader Glenn McConnell, R-Charleston,
called it "a defining week" for the future of tax relief.
If a resolution doesn't happen this week, the legislation gets trumped in
priority by the budget. And if the $6.5 billion spending plan stalls,
property tax relief this year is "very iffy," he said.
"Unfortunately, this is so complex an issue that senators keep waiting for
this magical formula to come without the discomfort of a vote," McConnell
said. "That isn't going to happen. To get to the finish line, we have to
take some uncomfortable votes."
Factions in the debate
The Senate already has approved two constitutional amendments that cap the
amount a home's value can increase during reassessment and restrict local
government's ability to increase tax rates.
But providing actual tax relief is the tough part because of diverging
factions.
Grass-roots taxpayer groups mobilized behind the House plan, which would use
a 2-cent increase in the statewide sales tax to provide an 85 percent
reduction in home taxes. It also would eliminate the tax on groceries. They
aren't willing to settle for anything less.
While the Senate committees considered changing the House legislation, the
taxpayer groups published negative newspaper advertisements against at least
two senators in the Upstate.
But senators had reason to pause after the House plan was so vehemently
opposed by the state's business community. Business groups dislike the plan
because, they say, it shifts the tax burden onto their backs.
They criticized House members for rushing through a plan without considering
that side of the equation. The Senate sought a more equitable solution but
hasn't found a proposal that makes every camp happy.
The plan that came out of the Senate Finance Committee would halve property
tax bills for homes valued at less than $150,000, as well as provide some
reduction in vehicle taxes.
Proponents of this concept - and there are few of them - tried to balance
the needs of coastal areas and those of rural, slower-growing counties in
which property owners haven't seen much of an increase in their home tax
bills.
Geography also is a dividing factor for the way money would be distributed
to schools. Local property taxes pay for a large portion of school operating
costs. Reducing property taxes in exchange for a higher sales tax would give
the state the responsibility of returning the revenues equitably to local
school districts, a politically impractical task.
Options on the table
These issues will be on senators' minds this week. At the moment, four plans
are on the table. If any action is taken, expect one of these - or more
likely, a hybrid - to emerge:
--The House plan: This proposal is a 2-cent sales tax increase to remove the
bulk of home taxes. Senators don't like the tax-swap concept, but the
measure provides the most tax relief for homeowners, the loudest critics of
high tax bills.
--A modified House plan: Written in the fall by a special Senate committee,
this arrangement raises the sales tax 2 cents to halve home and vehicle
property taxes and give renters a small tax break. Senators rebuffed this
concept when the session began in January.
--The Grooms amendment: Sen. Larry Grooms, R-Bonneau, came up with a
bipartisan plan that equally offends nearly every segment of the taxpaying
population. It would eliminate about 60 percent of home taxes, but how it
gets to that point is what makes it controversial.
Grooms is proposing increasing the sales tax, the alcohol surtax, the
cigarette tax, car sales taxes and deed recording fees. He also wants to
remove 10 sales tax exemptions and impose a statewide tax on every type of
property but homes.
--The Campsen alternative: The Charleston senator acknowledges the
geographical differences at work, so he proposed a measure that lets
counties provide property tax relief by shifting education financing to the
sales tax.
It would allow counties to increase the sales tax enough to reduce home
taxes by removing the portion that goes to schools. In Charleston County, a
sales tax increase of three-quarters of a penny would cut home tax bills in
half.
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