Dear Dr. Warner Montgomery,

Senator McConnell asked me to respond to your correspondence regarding property tax reform. The Senator and staff have noted your comments regarding Senate Bill 880, and your support for elimination of property taxes.

As a point of clarification, please note that S. 880, because it will increase the sales tax, is a revenue–raising bill. The SC Constitution requires that revenue–raising bills must originate in the SC House of Representatives, not the SC Senate. Also, S. 880 does not include any constitutional amendments. Constitutional amendments have to be introduced as separate bills known as Joint Resolutions. A Joint Resolution may originate from either the SC Senate or the SC House of Representatives.

As you may know, on December 1, 2005, the Senate Judiciary and Senate Finance subcommittees on Property Tax Reform approved for prefiling a Joint Resolution amending the state constitution that would change the methods of reassessment and would allow counties the option of choosing different methods of assessment.

Under this plan, every county would move to a ‘point of sale’ system where property would be reassessed only when it is substantially improved or changes owners. In addition, counties would have the option of keeping the current system or implementing other methods as provided by the General Assembly. The language of the amendment grants taxpayers the ability to overrule their local governments’ decision.

The second constitutional amendment would limit increases in millage for taxing jurisdictions. It has been anticipated that this document will be available by the end of December once it has been completed and reviewed by members of the subcommittees.

Also, the Senate subcommittees are considering a proposal that would increase the sales tax from five cents to seven cents. These additional funds would be used to eliminate school operating property taxes on all owner–occupied residences and personal property vehicles. The sales tax on food would be reduced by two cents in the first year and eliminated in subsequent years.

This proposal has been referred back to Senate Finance so that further research can be done on the funds available to accomplish these objectives. The Finance Committee will be reviewing this proposal in January 2006. A draft of these proposals as well as detailed information on subcommittee meetings and other information concerning property tax reform is available at the www.scstatehouse.net website. Select the “Citizens’ Interest” button, then go to the property tax reform line item for the Senate and click “here” for more information. Again, Senator McConnell thanks you for your interest and concerns regarding this important issue.

Sincerely,

E. Katherine Wells

Staff Attorney

SC Senate Judiciary Committee