Herbkersman proposes bill to allow local-option proceeds to pay for education

cconley@islandpacket.comFebruary 15, 2013 

A bill that would let municipalities charge a local-option sales tax and use the proceeds to pay for recurring costs such as school operations has been proposed by state Rep. Bill Herbkersman.

Herbkersman, a Bluffton Republican, says the bill would help counties cover the cost of school operations.

He also believes it spreads those costs more fairly to all residents.

"If everyone is paying a little bit of the school operating cost, and you are not relying on second homeowners to pay for it all, it's more fair."

Current state law does not allow local-option sales tax revenue to be spent on recurring costs such as annual operating expenses.

ACT 388 ANTIDOTE?

Herbkersman's bill is the latest attempt to counteract portions of Act 388, which raised the state sales tax by a penny -- to 6 percent -- and prevented property taxes collected on owner-occupied homes from covering school operations.

The law essentially lowered taxes on homeowners while raising them on businesses, second homes and rental properties, which are now picking up the tab for most school expenses, Herbkersman said.

"Quite frankly, if you had a second home next to mine and you're paying three times more in taxes ... there is really no fairness and equity in that at all," Herbkersman said.

The law has frustrated Realtors and second-home owners, many of whom believe it's unfair for them to pay for schools in a community where they don't live year-round. It's also spurred a sharp increase in the number of homeowners seeking to make second homes their primary residence.

John Robinson, the 2012 president of the Hilton Head Island Board of Realtors, said he was unfamiliar with Herbkersman's proposal and could not comment.

Attempts to reach Charlie Reed, who is part of a local effort to repeal Act 388, were unsuccessful.

SOME SUPPORT

County voters have twice approved a temporary, local-option tax for road projects, most recently in 2006. That penny sales tax expired in October after raising $152 million, or about $30 million a year.

When the tax was winding down last year, county councilmen began thinking about seeking voter approval for another local tax. In principle, at least, there is some support on council for passing another tax that could pay for new road work and provide property tax relief.

"I am not opposed to a local option sales tax, especially because we know probably half of that money is collected from visitors," said Councilman Rick Caporale.

Councilman Jerry Stewart also likes the idea of using the new revenue to lower property taxes for non-owner-occupied properties.

Some on council disagree.

Steve Baer, while not specifically addressing school costs, said during an economic-development workshop Monday that he's wary of new local-option sales taxes.

"It's sort of a difficult pill to swallow," he said "It's regressive and has many other problems. If we have to fund something, there are probably many other ways."

SENATE SUPPORT UNCERTAIN

Herbkersman says his bill should garner strong support in the S.C. House. He's not so sure about the state Senate.

State Sen. Tom Davis, R-Beaufort, says Herbkersman "deserves credit for taking this initiative" to resolve the "immoral" tax disparity between resident homeowners and those who own businesses or second homes.

However, he said the proposal does nothing to limit state spending.

Davis, who is on the Senate's Finance Committee, has proposed his own fix for Act 388 that calls for incrementally raising the state sales tax from 6 to 6.25 percent. He also advocates closing some of the nearly 100 sales tax loopholes and capping annual state spending increases to the rate of inflation.

"The bottom line is this," Davis said. "Given the excessive level of state government spending, and the prospect of at least $600 million in new sales-tax revenue (by closing loopholes), it is not necessary to raise or create any new taxes to remedy the inequities and undo the damage caused by Act 388."

Related content

  1. Davis offers compromise to lower taxes on second homes, Dec. 8, 2012
  2. State Sen. Davis: Repealing Act 388 not the answer to high taxes in Beaufort County, Dec. 1, 2012

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