New statewide reassessment cap has same constitutional problem

On the last day of the session, the House gave its approval to a constitutionally questionable 20 percent property reassessment cap that is headed for some careful legal scrutiny from the governor's office. If it ever does become law, the odds are it would be taken straight to court. This isn't the first time the Legislature has tried to change property tax law the easy way -- by legislation rather than constitutional amendment. Apparently, it never learns. Lawmakers passed a local option, 15 percent reassessment cap law several years ago that was approved only by Charleston County. It currently is in the courts. This bill's only major difference is that it sets the cap at 20 rather than 15 percent and would be effective statewide. Charleston County first utilized the local option provision by implementing the cap on owner-occupied properties only. The state Supreme Court said the county went beyond the bounds of the legislation by limiting the cap to only one class of property. That decision left the constitutional question dangling. The county still faces a massive refund of tax dollars from that episode. The county's subsequent decision to implement the cap countywide has been legally challenged by the city of North Charleston, which contends most of its residents would suffer as a result. North Charleston officials are among those who argue that the cap would primarily benefit those in the areas where property values have escalated wildly, primarily the city of Charleston's historic district and the beach communities. Opponents argue that those whose property values remain the same or decline would pay more than they would if there were no cap. The case was argued in circuit court here last week and an order is expected shortly. Regardless of the outcome, the Supreme Court is the expected next step. The only way that won't happen is if the governor signs the new law, which voids the earlier local option legislation. But if he does sign, it's all but certain that local governments such as North Charleston would challenge the new law. North Charleston Attorney Brady Hair notes that the constitution requires that property taxes be levied on the actual value of the property. If a cap is imposed at any point, the tax no longer would be levied on the actual value, he argues, and therefore would be inconsistent. In other words, Mr. Hair notes, someone whose property value has risen by 40 percent would get a greater break than someone whose property value has risen only 19 percent. Mr. Hair contends that 85 percent of the property owners in North Charleston would be adversely affected by the reassessment cap. The counter argument is that many property owners, through no action of their own, are faced with property that has so increased in value that they can no longer afford to live in properties handed down for generations. They contend that the effect of the cap on those whose property values haven't changed much is minimal compared to those who reside where values have soared. There's no question there is an argument for a hard look at the property tax structure in this state. But if the Legislature believes a cap is the best way to approach the problem, it should have put the issue to the voters years ago. If the method of imposing property taxes was important enough to be put in the constitution, then that's where any fundamental change must be addressed. Fortunately, since the bill wasn't passed until the last day of the session, the governor has the rest of the year to decide whether to exercise his veto. His staff doesn't expect it to take that long, but says the legal issues and the policy questions will be given serious consideration. Since the constitutional question is the same for both the 15 percent local option cap and the new 20 percent statewide cap, one option for the governor is to wait for a court decision in the North Charleston case. Sooner or later, the Supreme Court, not the Legislature or the governor, will have to decide this matter.

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