Tax bill meets opposition, including County's

Local legislators advise against analyzing much of the property tax legislation on hold in Columbia because it will most certainly change in the next few days.

The S.C. Senate adjourned Thursday without taking any action on a plan that seeks to adjust the current practice of "point-of-sale" valuation, a change in the way properties are assessed for tax that has frustrated real estate and municipal associations around the state. They say point-of-sale equals large tax increases in an already troubled real estate market.

Many local governments argue the plan threatens their revenue and ability to provide services because some houses are not being taxed at their full value.

On Tuesday, Aiken County Council unanimously approved going on record as saying it is against a bill that weakens the flow of property tax money into the local government that in turn hampers its ability to provide public services.

Property tax reform was approved by voters in 2006 when the real estate market was faring much better than it is now. The reform placed a 15 percent cap on increases in property value. Supporters believed the cap would help homeowners afford taxes on properties that could later double, even triple in value. So, the cap means an affluent home is likely on the tax rolls at a value much lower than what its sale price might be.

But it seemed no one noticed the point-of-sale provision. It allows the 15 percent cap to be removed when property changes hands and requires the new owner to pay taxes based on the actual sale price. That could mean dramatically higher taxes for the new owner the following year.

State government officials who are proponents of point-of-sale said the provision allows a county's overall assessed value to increase despite the 15 percent cap. When a property changes hands, it is reassessed and taxed at full value the following year. Those reassessments keep the tax base growing, officials said.

The Municipal Association of South Carolina argues that the tax burden will shift to homeowners living in lower valued properties.

Aiken Board of Realtors President Livia May said the reform that passed in 2006 is no good.

"I will say we are responsible for it because we thought, several years ago, property taxes would go down. But we didn't know what we do now. Now we know," she said, adding that potential investors and homeowners have been turned off by point-of-sale. "We probably have lost jobs, lost money into our economy."

A special task force made of Realtors, municipal associations, school officials and others reached a compromise earlier this week on a plan that would change the point-of-sale tax. But the Municipal Association of South Carolina reported Thursday the Realtors had pulled their support of the plan and debate stalled on the Senate floor.

"Apparently, it all fell apart overnight," said Sen. Shane Massey, R-Aiken.

The parties agreed to meet again Monday with Sen. Thomas Alexander, R-Oconee, to continue work on a compromise.

"We have a significant problem that needs to be fixed," Massey said. "But I am concerned about pushing something through too quickly and causing an even bigger problem."