County, municipalities set sights on sales-tax referendum decision

zmurdock@beaufortgazette.comMarch 1, 2014 

A decision on whether Beaufort County voters will be asked to raise their sales taxes in November could be reached this month, according to municipal and county officials.

Two local sales-tax options are being considered for referendums this year, but local leaders disagree on which tax they prefer or whether both should be on the ballot.

However, if either tax is to become a reality, the process of crafting the ballot language, holding public hearings and selling the ideas to voters needs to begin soon, officials agree.

The first 1 percent sales tax option would raise additional revenue for the municipalities and the county in exchange for property-tax relief for residents.

The second option would fund specific large capital projects, as the county did with road projects in a 2006 referendum that added a 1 percent sales tax that has since expired.

Before the proposals could be put on the ballot, they would have to be vetted by county officials and approved by County Council by this summer.

Between the two options, County Council leans toward the sales tax for capital improvements, while three municipalities -- Beaufort, Bluffton and Port Royal -- prefer the option that offers property-tax relief, officials said.

Hilton Head Island's Town Council hasn't decided on either sales tax, but will review both in the coming weeks, town manager Steve Riley said.

The council has been reluctant to endorse the local option tax that provides property tax relief. State law -- Act 388 -- limits how much local governments can raise property taxes, Riley said. Council believes adding a local option tax would simply swap one tax increase for another.

Local leaders should try to decide before the end of the month, said County Councilman Jerry Stewart, who is leading the referendum effort for the council.

Last week, County Council voted to create a six-member commission to review potential capital improvement projects, as required by state law, before a referendum can be held. Some projects County Council has discussed include the purchase and development of 102 acres at the Pepper Hall property along U.S. 278 and the Okatie River, building upgrades, and bridge replacements.

The commission will also review project lists from the municipalities and report back to County Council on which ones a referendum should include and whether a vote is feasible this year, county attorney Josh Gruber said.

That keeps the capital improvements referendum option available, while County Council and municipal leaders continue to review a possible local option sales tax, Stewart said.

Instead of funding specific projects, the local option sales tax would be split into two pots. Between 63 and 71 percent of the money would go for property-tax relief, and the rest for local governments.

Tax relief would apply to real property and personal property, such as cars, boats and planes, and would also extend to owners of property in Beaufort County who live outside the county, Gruber said.

Beaufort City Council plans a workshop at 5 p.m. Tuesday in City Hall to discuss the local option sales tax, which the city endorsed as its preference last year, city manager Scott Dadson said.

Property-tax relief helps make the local option sales tax more palatable to voters, Dadson said. But it also gives the city a new revenue stream to help relieve the tax burden on any one particular group, like businesses or homeowners, he added.

"We feel strongly the local option sales tax is a way to give tax relief and diversify the revenue stream," Dadson said.

Port Royal and Bluffton governments also endorsed the local option sales tax last year for the flexibility it would give them when creating budgets, in addition to the property-tax relief for residents, Port Royal town manager Van Willis and Bluffton Mayor Lisa Sulka said.

With support for both sales tax options, County Council might opt to let voters choose between them, Gruber said.

"If I had to guess, I would think both of them would likely come forward," the county attorney said. "The comments that I've heard (from County Council members) are that they want it to be up to the voters."

Regardless, leaders need to give some direction as soon as possible, Councilman Stewart said.

"If we're going to be able to do either of them in November, we really need to be moving along with it," Stewart said. "... I would like to get a decision absolutely no later than the end of March, and I would hope that we could get it earlier."

Follow reporter Zach Murdock at twitter.com/IPBG_Zach.

Related content:

Beaufort County Council considers sales-tax referendums, Feb. 14, 2014

Municipalities push for local-option tax referendum, June 8, 2013

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