Beaufort County Council members kicked off their three-day annual retreat Thursday by reviewing the year's successes and laying out the challenges to come -- among them, how to continue providing quality services in the face of declining property values and reduced tax revenue.
The county is required by law to reassess property values every 5 years. The next assessment will take effect on Dec. 31, 2012.
"We are 21 months from that date of value," said county assessor Ed Hughes, "and I am alarmed -- as well as everyone else here -- at the diminished market value, particularly south of the Broad River."
Properties values on Hilton Head Island have dropped particularly precipitously, Hughes said, "somewhere between 30 and 35 percent."
Taken together, the fair market value of the entire property tax base after the last assessment in 2007 was about $45 billion.
Hughes said if the county were to reassess now that number would drop to about $37 billion.
Despite those financial difficulties, counties will continue to see increased demand for their services, sometimes due to cuts in the private sector, said Lyle Sumek, a consultant who guided the retreat conversation. As an example, Sumek cited pumped up demand for computers at public libraries.
"North Las Vegas: The casinos no longer give pay stubs to their employees; they need to go online," Sumek said. "Only 48 percent of the households have computers. So where are these other 52 percent going to?"
While there might be ways to mitigate the loss in revenue from a smaller tax base, council continues to debate its options.
Normally, real estate prices increase with each reassessment, and the county decreases tax rates to bring in the same amount of revenue -- a tax roll back.
But in response to declining values, council members are examining the feasibility of increasing millage -- what the group calls a theoretical "roll up." That roll up could mean higher tax bills for some homeowners, despite declining values.
Hughes said he's concerned by a possible "tax shift" in which residents with homes in the $200,000 to $400,000 range take on a greater share of the tax burden.
It's unclear, though, whether a roll up is even an option.
County administrator Gary Kubic said in an interview after the retreat that the law detailing tax roll backs doesn't mention what to do when the tax base shrinks. He said it might come down to an administrative decision in the S.C. Department of Revenue.
The county's attorney, Lad Howell, will research the issue and clarify it, Kubic told council.
Even if it's an option, though, Chairman Weston Newton said there's no guarantee it would pass council.
"I'm not sure that we've got enough information to say that everybody is willing to support a roll up," he said.
The council requested staff sift through the data and cull about 10 examples of how a roll up would affect a typical home.
Councilman Brian Flewelling said the county should find ways to reduce its budget so it has the ability to avoid or mitigate the effects of a roll up "as painlessly and as seamlessly as possible."
Resident might still see a tax increase from another council, though.
"He may not get hit by the county; he may get hit by his hometown," said councilman Rick Caporale.
Newton described the financial future as "a sobering reality."
"In my humble opinion, this reappraisal problem and the way that it's publicly perceived and the impacts, may be the single biggest challenge that we've faced in 10 years," he said.
Council members will reconvene for additional retreat sessions on Friday and Saturday.