The big jump in property taxes in Jasper County offers a cautionary tale, and not just for Sun City Hilton Head property owners on one side of the county line or the other.
Sun City residents who live on the Jasper County side of the community are complaining about the differences in the property taxes they pay compared with their neighbors on the Beaufort County side.
But their geographic location is but one reason for a higher tax rate. Beaufort County taxpayers could see a similar scenario play out.
Jasper County completed a reassessment of property values last year and saw property values drop. A 26 percent increase in the county's tax rate can be attributed in part to that drop in values.
Jasper County raised its rate to such a degree, despite a state-imposed cap on tax rate increases for county and school operations, after an attorney general's opinion this summer concluded state law requires local governments to stay "revenue neutral" after a countywide reassessment.
Historically, property values have risen between reassessments, which must be done once every five years. When values go up, the state requires local governments to roll back property tax rates so that they don't get a windfall due to the reassessment.
But the attorney general's opinion states that the law sets up a formula for local governments to use to determine what it will take to stay revenue neutral. They must follow the formula even if it means a tax rate increase.
Still, the Attorney General's Office also noted that until the courts rule on this "novel question," it won't be settled definitively.
We don't know yet the impact on Beaufort County taxpayers; the soonest the new values will go on the books is 2013, and that could be delayed one year.
But Jasper County folks are all too painfully aware. Look for a lawsuit from a taxpayer there to challenge the tax hike.
At a meeting earlier this month, Jasper County officials attempted to explain how and why they did what they did.
They said they plugged the numbers into the state formula and came up with tax rate that kept them revenue neutral. Then they looked to the rate increase allowed under the Property Tax Reform Act -- the percentage increase in population plus the inflation rate. That 4.62 percent was added to the tax rate derived from the formula.
The cap doesn't apply to the tax rate to raise money to pay off debt. Some of the increase was attributed to that.
To their credit, Beaufort County officials have worked to bring their budget in line with an expected drop in property values. They cut spending for this fiscal year to more closely match tax collections.
And even if a tax rate increase is required by state law, it won't affect everyone in the same way. The out-of-pocket impact will depend on what happened to your property value. High-end properties have seen the biggest drop in values, county officials say, as much as 30 percent to 40 percent or more. A tax rate hike will hit harder people whose property values didn't drop as much.
We have inequities galore in our property tax system now thanks to the 2006 reform act.
Properties are protected from big jumps in values by a 15 percent cap on assessed values. Long-time property owners can end up paying less in taxes than someone who recently bought a very similar property.
Second-home owners and commercial property owners pay school operating property taxes that resident homeowners don't pay. With school operating taxes such a large portion of the tax bill, that makes a big difference in a bill. (Yes, residents pay the 1 percent sales tax levied to make up for the school operating taxes, but it's probably far from a wash unless you're a very big spender.)
If the Attorney General's Office is right about the requirement to "roll up" tax rates as a result of dropping values, Jasper County property owners won't be the only ones complaining.