State Law Could Mandate Tax Increase

By Paul Gable

A state law that forces rollbacks of millage in reassessment years, so local governments do not benefit from rising property values, appears to mandate a tax increase if property values fall.

That is the conundrum facing Horry County Council as it begins its fall budget retreat today.

A June 2011 opinion from the office of the S.C. Attorney General notes in its conclusion that state law, specifically sections 12-37-251 and 6-1-320, was enacted to protect taxpayers by rolling back millage when property values rise due to reassessment.

But, the kicker comes in the next two sentences of the opinion:

“However, while this legislation acts to protect taxpayers, we also believe that the Legislature sought to stabilize tax bills in order to provide municipalities with a consistent stream of revenue.

“While sections 12-37-251 and 6-1-320 do not specifically address the situation in which overall property values decrease, due to the mandatory language contained in section 6-1­320(A), we believe the Legislature intended for this calculation to be used in any year of reassessment, not just when overall property values increased.”

Therefore, if Horry County Council holds spending in next year’s budget to current levels, Horry County taxpayers will not see an increase in actual dollars on their tax bills next year due to reassessment. However, they will be paying higher tax millage rates on their property, if that property has fallen in value over the past five years, as it almost certainly has.

If the property gains in value, remember state law allows point of sale reassessment, the new millage rate will apply to the increased value. In other words, if property values rise and the property is sold, the new owner will be paying more tax than the previous owner.

I can’t wait to hear the state real estate lobby on that one.

But, this is what happens when the state legislature is unwilling to allow full implementation of “Home Rule”. By trying to control the actions of local government from Columbia, the state legislature has mandated a tax increase.