Sales-tax proposal's success rests on Hilton Head, some Beaufort County officials say

dburley@islandpacket.comMarch 17, 2014 

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If the opinions of two Hilton Head Island councilmen are any indication, the town won't be among the Beaufort County municipalities favoring a sales tax to provide property-tax relief.

And a lack of town support could be enough to sink a tax that leaders in other Beaufort County municipalities would like to propose in a countywide referendum this fall, according to several on Beaufort County Council.

Hilton Head Councilmen George Williams and Lee Edwards said Monday they oppose a 1 percent sales tax to raise more revenue for municipalities and the county in exchange for property-tax relief.

"I'll do everything I can to make sure (the tax) doesn't pass if it gets on the ballot," Williams said Monday at a Town Council subcommittee meeting.

The 1 percent sales tax is one of two taxes that Beaufort County might put on the ballot in November's general election. The other option being considered also is a 1 percent sales tax, but it would pay for specific capital improvements throughout the county and end when the money for those projects has been raised.

The sales tax for property-tax relief -- also known as a local-option sales tax -- would not have an expiration date. It also would require that 70 percent of the revenue it generates be used to reduce property taxes, with the rest to be spent at the local governments' discretion.

Although municipal governments would share in the proceeds, they cannot enact it themselves. Instead, County Council would have to agree to place it on the ballot, and it would have to be approved in a countywide referendum.

Municipal leaders from the city of Beaufort and the towns of Bluffton and Port Royal have endorsed the sales tax for property-tax relief, saying it would give them more flexibility and the ability to pay for smaller capital projects -- such as fixing pot holes or cleaning drainage ditches -- as they arise.

Projects to be paid for by the capital-improvements sales tax, on the other hand, would be restricted to those identified by a commission before the referendum and might not include those the municipalities seek to complete.

"It would be much easier to deal with capital needs with the local option," Beaufort Mayor Billy Keyserling said Monday.

Opponents on County Council argue that property-tax reduction won't provide true relief -- residents would simply pay more in sales taxes. Critics also say they don't like the idea of starting a sales tax that does not expire.

Hilton Head Town Council's position on the sales tax could have broad implications, some county officials say. Last year, Hilton Head leaders, including Mayor Drew Laughlin, opposed a similar tax.

"If it decides to oppose the tax, it will have a major impact on how (County Council) votes and whether it has a chance to pass in the fall," said county Councilman Jerry Stewart, who opposes the sales tax.

County Councilman Stu Rodman, who represents the south end of the island, said Hilton Head's typically high voter turnout means sentiment there could determine a referendum's outcome.

Rodman said constituents he has spoken with oppose the tax.

Keyserling acknowledged that Hilton Head is key to the proposal's success because of its voter population and political influence.

But he said business and second-home owners whose property-tax bills will rise after last year's reassessment would welcome relief from the sales-tax increase.

If the Hilton Head council doesn't support it, Keyserling added, "We'll start a grassroots campaign and talk to citizen groups and businesses."

County Council is expected to take the first of three votes on the two sales-tax proposals March 24. Depending on the outcome, voters could see one, none or both taxes on the ballot this fall. The Hilton Head council is scheduled to vote April 1 on whether it supports the sales tax for property-tax relief.

Follow reporter Dan Burley at twitter.com/IPBG_Dan.

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