Fewer appeals could create tax windfall in Charleston County

Charleston County, the school district and municipalities that levy a property tax could wind up collecting more money than they planned because fewer property owners than expected appealed their assessment increases. When property tax rates were adjusted after Charleston County's reassessment, the Assessor's Office estimated that appeals, filed by property owners who thought their properties were overvalued, could end up reducing the tax base by 6 percent. That might not sound like much, but 6 percent amounts to $2.55 billion in taxable property. That's enough to produce about $13.7 million in taxes for the school district and smaller amounts for the county and municipalities. The county Auditor's Office and budget preparers throughout the county responded to the estimates accordingly, setting tax rates with the assumption that they would be able to tax only 94 cents of every assessment dollar. Now, with the deadline for filing appeals having passed for most Charleston County property owners, only about 5 percent of property owners have challenged their assessments. Even if all of them were to somehow get their property values not only reduced but eliminated entirely, the tax base would be larger than anticipated. Normally, if cities or school districts collect substantially more in property taxes than planned after a reassessment, they must return it to taxpayers. Typically, the tax rate the following year would be adjusted. "If they get a windfall, they deduct it from next year's budget," said Chief Deputy Auditor Ron Hall, whose office calculated rollback tax rates. "A lot of this is based upon estimates." Assessor Mike Huggins said his office needed to estimate the impact of appeals before the appeals process was through so budgets could be drafted, and he relied on past experience. "We used what we experienced in 1993, the last full-blown reassessment, without the confusion of the tax cap," he said. That year, 11 percent of property owners appealed their new values, and the result of those appeals knocked about 6 percent off the total assessed value of the county, Huggins said. Today there are about 154,000 properties in Charleston County. Of those, the deadline to file an appeal has passed for about 139,000, Huggins said. The others, because their assessment notices were mailed out later, have a short amount of time remaining to file a challenge. Many of those properties were freshly assessed new constructions, Huggins said. Huggins said even appeals that eventually are unsuccessful can temporarily put a dent in municipal budgets. "The law says that if an appeal isn't resolved by Dec. 31, they get an automatic reduction to 80 percent of the value," he said. "If it's not resolved in their favor, they have to pay the 20 percent, plus interest." Likewise, if a property owner who filed an appeal goes ahead and pays the full tax bill and later wins the appeal, the county must pay the difference, plus interest, Huggins said. The school district and the county will have some time to see how the appeals process shakes out because their budget years run from June to June. For others that budget on a calendar year, such as the city of Charleston, it's a little more complicated. Chief Financial Officer Steve Bedard said the city already will have approved its budget for 2006 by the time the assessment appeals are resolved. The city's budget assumes that appeals will wipe out $1.4 million in potential property taxes, based upon the county's assumptions. "Say we ended up with more than we thought," Bedard said. "That money would roll into our undesignated fund balance, and we would adjust the budget for the next year." "The kind of money we could end up with wouldn't be considered a windfall because we're starting around $500,000 in the hole," he said. "If we had a big enough number, we would have to look at rolling back the millage (tax rate)." Charleston was the only municipality in the county that reset its tax rate lower than the county recommended, and Bedard estimates the city will collect less money than was budgeted prior to reassessment. Huggins estimated that, of the people who do appeal, between 50 percent and 75 percent get some reduction in assessed value.

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