Beaufort County School District budget, tax hike clear hurdle

The proposed Beaufort County School District budget — which comes with a tax increase for some property owners — cleared a major hurdle Monday evening.

The Beaufort County Council granted preliminary approval for the district’s roughly $215.5 million fiscal year 2017 budget, which is set to go into effect July 1.

Despite their blessing, many council members voted to move the budget forward while holding their noses.

The stench — a tax increase necessary to close a $5 million revenue gap.

That shortfall, caused mainly by lower-than-anticipated tax revenues, is in part due to the way South Carolina funds its public schools, county and school district officials say.

Act 388, a state law passed in 2006, established a system in which the vast majority of school operations are funded by owners of businesses, second homes and rental properties. These property owners pay a 6 percent property tax rate.

The owner of a second home valued at $265,000 — the county’s median — would pay almost $130 more in annual property taxes, according to a school district proposal. Many of these property owners do not have children attending school in the district.

Full-time residents pay a 4 percent property tax rate, none of which is used to fund school operations.

“Act 388 is a real problem,” Councilman Jerry Stewart said Monday, calling the law a “problem that (state lawmakers) keep kicking down the line.”

In Beaufort County, the pool of 6 percent taxpayers has shrunk in recent years relative to those paying the 4 percent rate.

This accounts for the lion’s share of the $5 million revenue shortfall, district superintendent Jeff Moss said Monday.

With district enrollment growing by between 300 and 600 students annually, the current funding mechanism for schools is “not a sustainable model for the state of South Carolina,” Moss said.

Filling the district’s $5 million revenue gap left County Council members feeling stuck between a rock and hard place at Monday’s meeting.

“The dilemma is: Do you squeeze the kids (attending school in the district) or do you squeeze (people who own properties taxed at) 6 percent?” Council chairman Paul Sommerville said. “That’s a real dilemma.”

For now at least, the council members have opted to squeeze the owners of commercial properties and second homes.

The school district budget will come before the County Council twice more next month for a final version is adopted.

Other council action

The County Council granted preliminary approval to Beaufort County’s 2017 fiscal year budget proposal.

The roughly $116-million budget also comes with a tax increase.

If approved next month, the budget would increase property taxes by about 5 percent.

For owners who live full-time in houses valued at the county’s median of $265,000, that means about $22 more in annual property tax payments. Owners of second homes would pay about $33 more.

This story was originally published May 23, 2016 at 8:49 PM with the headline "Beaufort County School District budget, tax hike clear hurdle."