Property tax complaints aren't going to go away

September 23, 2010 

Lawmakers might have tied the hands of a tax study committee when it comes to recommending changes to their property tax reform effort of four years ago, but eventually they're going to have to address what they've done.

That is, they will if they're truly serious about comprehensive tax reform.

Their prohibition certainly isn't stopping some very unhappy constituents from complaining about the law.

The Taxation Realignment Commission got an earful on the subject at its meeting Tuesday even though the legislation creating the commission specifically prohibited it from looking at the exemption for resident homeowners on paying school operations taxes. An effort to change that directive failed this past session.

Commissioners say they can't take up any part of Act 388, which also includes resetting values when property is sold, a 15-percent cap on reassessment values over five years and a cap on property tax rate increases by local governments. School operations money from resident homeowners was replaced with a 1 percent sales tax.

But complaints abound about the point-of-sale provision's impact on real estate sales of all types and the shift in the burden to pay for school operations from residents to second-home owners and business owners.

School districts, particularly Beaufort County, complain that owners switching to resident status to get the 4 percent assessed value rate and avoid the operations taxes has reduced their tax base, even while the law limits their ability to raise tax rates. All the while, our school district is penalized for a tax base it can't even tap anymore when it comes to the main source of state education funding.

The complaints and suggestions at Tuesday's meeting ran the gamut.

Dan Harvell, an advocate for the group,, said he wants to see all homeowners' taxes eliminated, The Greenville News reports. Ron Harrleson, who manages and invests in rental property in Florence, said he no longer was buying property.

"I can't afford to rent it for what I need because the taxes are so high," he said.

Jay Rinehart, president of the South Carolina Association of Realtors, called crazy the state's system of assessing different kinds of property at different rates, from 4 percent to 10.5 percent.

Ben Brantley, chairman of the Greater Columbia Association of Realtors, said the combination of the recession and the state's property tax structure is keeping investors away.

It never made sense to tell a group that was supposed to offer recommendations on comprehensive tax reform to stay away from a major component of tax law. Lawmakers might have intended to avoid the subject during an election year, but they just put off the inevitable.

They are going to have to deal with Act 388 and its consequences -- unintended and otherwise.

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