Municipalities push for local-option tax referendum

Measure would offer property-tax rebates, new source of revenue for towns, cities

cconley@islandpacket.comJune 8, 2013 

grpLOST0609


  • Supporters of a penny local-option sales tax say it would bring in enough revenue to reduce property taxes. Below are estimated property-tax savings, based on an owner-occupied home valued at $200,000:

    Local government Projected savings

    Beaufort County $51.78

    Town of Hilton Head Island $26.84

    City of Beaufort $100.44

    Town of Bluffton $58.18

    Town of Port Royal $252.40

    Source: City of Beaufort

  • Beaufort County Council is set Monday to hold the first of three readings on a proposal to put a local-option sales tax question on a countywide ballot. The meeting starts at 4 p.m. in the administration building at 100 Ribaut Road in Beaufort.

  • The Bluffton Town Council is scheduled to approve a resolution Tuesday in support of the local-option sales tax. The meeting starts at 6 p.m. in Town Hall at 20 Bridge St.

  • Beaufort County voters might be asked this fall to approve another 1-percent sales tax, which some municipal leaders say could bring much-needed property-tax relief.
  • Unlike the penny transportation tax that expired last fall, however, it would not have an expiration date.

    "A local-option sales tax is a tax we can use to a relieve the property-tax burden, and it gives (the city) money to use for anything, from additional tax relief to capital projects to the general fund," said Beaufort Mayor Billy Keyserling, who supports the tax.

    Given the number of tourists who pass through the county each year, Keyserling said, as much as half of the sales-tax proceeds would be collected from nonresidents.

    Not every town leader supports the proposal.

    Hilton Head Island Mayor Drew Laughlin said shifting the tax burden to people who don't own property is "a little bit of a hard sell for me."

    "This desire to replace property taxes with sales taxes on a state level has led to some unfortunate results in my opinion," he said, referring to Act 388, which raised the state sales tax to 6 percent while exempting owner-occupied homes from property taxes used to pay for school operations.

    The tax would have to be approved by voters in a referendum, and critics also note that holding an off-cycle election this fall would cost up to $60,000 and probably attract only a small fraction of voters.

    County Council has authority to place the proposal on the ballot, and the measure is due for the first of three readings Monday.

    THE LAW

    A 1990 state law allows counties to pass several types of local-option taxes. Some can be used to raise money for specific purposes -- transportation, school construction or other capital projects, for example. The taxes must be approved in a countywide referendum.

    The local-option tax being examined for Beaufort County would have no dedicated use. However, between 63 and 71 percent of the proceeds must be set aside for property-tax relief, according to state law. The remaining money would be divvied between municipalities with few strings attached.

    Beaufort County has a 6-percent sales-tax rate, the state minimum. It is one of only eight counties statewide without some form of local-option tax.

    Jasper County has two sales taxes -- a local-option tax and a local school district tax.

    Previous attempts, in 1990 and 1991, to pass a local-option tax in Beaufort County were rejected by wide margins, according to County Council Chairman Paul Sommerville. However, county residents have twice passed local-option transportation taxes, most recently in 2006. That tax expired in October after raising $152 million.

    THE IMPACT

    Based on various estimates, the penny tax would raise between $22 million and $30 million a year to be split several ways, according to a state-prescribed formula.

    Although complex formulas are involved, data provided by the city of Beaufort suggest the tax would raise about $13.7 million countywide to offset property taxes, based on about $22 million in annual proceeds in its first year.

    The same data suggest about $8 million would be split among the municipalities for capital projects, general-fund expenditures or additional tax relief.

    Under state law, the percentage of proceeds set aside for property-tax relief gradually increases from 63 percent to 71 percent over five years. At that point, the same $22 million in proceeds would generate about $15.5 million for property-tax relief. That revenue would show up as a credit on property-tax bills. It would not lower millage rates.

    MUNICIPAL SUPPORT

    The city of Beaufort and the town of Port Royal have passed resolutions supporting the local-option tax. Bluffton Town Council is expected to follow suit Tuesday.

    Bluffton Mayor Lisa Sulka said she's examined the proposal carefully and can't find a downside.

    "We are trying to find some way where we can get some tax relief for citizens, as well as have some money that can go into capital projects," she said.

    Port Royal Mayor Sam Murray said the additional revenue could be used for almost any municipal purpose, including repairs on crumbling roads.

    "In order for us to resurface these roads or repair them, it costs millions of dollars," he said, "and we can't raise the money we need to repair them."

    Keyserling said the additional revenue would be helpful to the city after so many tight budget years.

    On Hilton Head, where property-tax rates are the lowest in the county, property owners would see the least tax savings. For that reason and others, Mayor Laughlin and some Town Council members are skeptical of the plan.

    "When I look at the tax savings to a typical homeowner ... unless I own property that's worth a lot, I don't think I come out ahead," Laughlin said, describing the plan as "the ghost of Act 388."

    The state's Act 388 has been criticized for shifting school-operation costs to vacation, rental, commercial and industrial properties. Owners of these properties are charged a higher tax rate than owner-occupied homes.

    COUNTY COUNCIL SKEPTICISM

    Although County Council has agreed to consider a local-option tax, not all members are convinced it would be a good thing.

    Councilman Brian Flewelling said he has no problem letting voters decide if the tax will be levied, but he says the vote should take place in 2014, when turnout will be higher.

    "I am not opposed to a local-option sales tax; I am opposed to the timing of it," he said. "I think an issue as important as this deserves the consideration of ... as many voters as we can get."

    Special elections typically draw less than 10 percent of registered voters, according to county officials.

    There are practical matters, as well. Councilman Jerry Stewart says the special election would cost as much as $60,000.

    Stewart was also wary of the tax's lack of expiration date. It could only be repealed if residents petition for another referendum and the tax is voted down.

    Sommerville is less concerned about the timing of the referendum.

    "I think it's something voters can decide on," he said. "I am happy to put it on the ballot this year or next year."

    Follow reporter Casey Conley at twitter.com/IPBG_Casey.

    Related content:

    City of Beaufort to discuss local-option sales tax tonight, March 19, 2013

    Transportation sales tax hits end of the road today, Sept. 30, 2012

    The Island Packet is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

    Commenting FAQs | Terms of Service