Beaufort County is exploring whether state law allows -- or possibly even requires -- a tax-rate hike if the next property reassessment registers a reduction in real estate values.
The county is required by law to reassess property every five years, and values ordinarily rise between reassessments. In that case, state law requires local governments to "roll back" their millage rates so that higher assessments do not produce a revenue windfall and a de facto tax hike for property owners.
But the last county reassessment reflects property values before the real estate downturn sent prices plummeting.
Now, the question is whether local governments can "roll up" the tax rates to prevent a loss of revenue.
Turns out, they might not have a choice. A legal opinion issued last year by the S.C. Association of Counties argues the roll-back law makes no distinction between a tax hike and a tax break.
"It is a statutory formula, and it gives you a number that you use in place of the previous year's millage rate when you do reassessment," said John DeLoache, the association attorney who drafted that opinion.
DeLoache said the formula simply adjusts tax rates based on inputted figures, and regardless of the result, counties can't opt out.
Beaufort County Council and staff have expressed concern about how a roll up would affect lower-income residents. Although overall collections would remain the same, high-end properties have dropped most in value, shifting a greater proportion of the tax burden onto middle-class and low-income families.
County administrator Gary Kubic said the county is at least fortunate to be able to research the issue before its 2012 reassessment. Other counties don't have the luxury.
Jasper County's reassessed property values kick in this year, and its property tax base is down by about 8 percent, said director of administrative services Ronnie Malphrus. County leaders will have to decide before June 30 whether to follow the roll-up formula and increase tax rates.
Beaufort and Jasper counties have both requested clarification about roll up from S.C. Attorney General Alan Wilson.
Mark Plowden, Wilson's communications director, said research for that answer is under way, but he could not say when an opinion would be ready.