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HomeChamberGovernment RelationsLegislative Voting Results

CHAMBER  

Local Legislators Respond to Questions About the Impact of the 2006 S.C. Property Tax Reform Act


        Because of the importance of strong businesses and its connection with a strong community, it is the Chamber’s job to be concerned about the positive and negative effects of any legislation on businesses in the York County region. From its inception, the Chamber was actively involved in the 2006 S.C. Property Tax Reform Act (also known, and referred heretofore, as Act 388).

        Act 388 is the legislation that was approved to enact the substitution of a penny sales tax for local property taxes to fund school operations statewide. The implementation of Act 388 has resulted in some citizens celebrating the benefit of paying less property tax. However, many businesspeople, community supporters and public school advocates are becoming increasingly concerned about the long-term and irreversible consequences of this legislation.

        Responses were limited to a certain number of words, and the information appears in the exact words that were submitted and approved by each legislator on all four questions. The request for and publishing of responses is an effort to gain greater insight into how and why our delegation members are voting on issues of broad interest to the business community. Through this process, we also hope to receive creative but realistic ideas for addressing complex legislative issues.

        The Chamber extends its appreciation to all local legislators for their public service and special thanks to the eight delegation members that responded to our questionnaire.


Question No 1: As a result of Act 388, each of the four local public school districts is receiving less state funding. What are your ideas for correcting these funding shortages?

State Rep. Greg Delleney, Jr, District 43: Act 388 increased the sales tax by one cent, excluding groceries, to reduce the property tax burden on homeowners. In order to address any shortfalls in fast growing school districts, the state needs to provide single source funding where a specific amount of money is assigned per pupil.

State Rep. Carl Gullick, District 48: Base funding changes on the growth of the school district as opposed to the growth of the state.

State Rep. Herb Kirsh, District 47: I will see what the leadership of the House recommends and work from that position.

State Rep. Dennis Moss, District 29: Before we make any changes we need to take a comprehensive look at how education is funded. Currently, there is an EFA study committee doing that. When their report is released we should use it as a basis for updating how we fun education.

State Rep. Mick Mulvaney, District 45: We should delete the “funding formula” method and implement a “backpacking” approach, whereby districts would receive a set amount of money per student. This would provide for the approach level of funding for fast-growing school districts.

State Rep. Gary Simrill, District 46: Act 388 reduces the tax burden on homeowners by adding a one-cent increase to our current state sales tax (Excluding unprepared food). The act set out to protect poorer school districts but did not account for additional needs of the faster growing districts such as Fort Mill and Rock Hill. The solution is already in the works on two fronts. First, switch funding of our school districts to single source funding. Secondly, allow for additional monies to come to those districts that are growing beyond the state index.

State Sen. Wes Hayes, District 15: First, we need to change the one cent sales tax distribution method, which currently penalizes rapid growth school districts. Next, we need to change the way districts are funded to a system where the funding follows the child and extra weighting is given to high-growth districts with rapidly increasing building and staffing costs.

State Sen. Linda Short, District 17: I define fast growing as increasing in student population. Whether or not Act 388 caused a reduction in state funding, a growth factor should probably be added to the formula. Simplification of spending with broad requirements (ie core courses, gifted, arts, PE). State funding is the ultimate solution.


Question No 2: Although it is a further tax burden to the business community, one of the few mechanisms available to assist the public schools in addressing funding shortages is to allow York County districts to exceed the 6-mill taxation cap. How did you vote regarding the proposal to increase or remove the current 6-mill cap? Please explain the rationale for your vote.

Delleney: I have never voted to allow the York County districts exceed the 6-mill cap. I will not vote to raise property taxes or income taxes.

Gullick: I voted to make the cap the same as the rest of the state.

Kirsh: Voted against it. I am not voting to raise any tax on anyone.

Moss: Unfortunately, I was not a member of the General Assembly at the time that vote was taken and I’m unable to say how I would have cast my vote.

Mulvaney: The bill allowing York County to exceed the cap did not come up for a vote in the house. I have yet to understand why a new law is necessary, as current law already provides a mechanism for exceeding the 6-mill cap: a public referendum.

Simrill: The delegation met with the superintendents of the four York County school districts but did not take a vote to remove or increase the 6-mill cap. I do not support and will not vote for raising or removing the current cap.

Hayes: I voted to eliminate the 6 mill cap for the four districts in York County. My reason for this vote is that under Act 388 we have a cap on millage increase in all school districts (as well as cities and counties) in SC of CPI plus population growth and thus a local cap is no longer needed.

Short: I voted to remove the 6 mill cap. I hope for state funding of education but until that occurs, I do not object to local taxing authority within the limits established by Act 388. Those limits should be periodically reviewed and adjusted.


#3: An additional consequence of Act 388 is the substantial increase of property taxes being levied upon all local businesses. From the standpoint of competitiveness and the ability of economic development officials to recruit new businesses to Rock Hill and York County, business property taxes are now 2-3 times higher than those in Charlotte and other nearby communities for the same property values. This is particularly a problem for small businesses and other firms that do not qualify for state incentives. What are your ideas for addressing this competitiveness issue for the many economic development prospects that are considering relocation to our county?

Delleney: We need to reform our tax policy and work towards reducing or abolishing property taxes in favor of excise taxes and a flat income tax.

Gullick: Total reform of our tax laws.

Kirsh: Same answer as #2

Moss: Millage rates were intended to protect the business community, however, that hasn’t worked and businesses, particularly those in border counties, have suffered. It’s something we need to look at in the coming year. There may be incentives or local option taxes we can use to attract businesses to the area.

Mulvaney: Ending corporate, S-corp, and partnership taxes would go beyond bringing the competitive balance back in line: it would give us a tremendous advantage over surrounding states. I introduced legislation last year that would have done exactly that.

Simrill: In partnership York County and South Carolina have done well in bringing businesses to our county. Keeping taxes low and quality of life high coupled with having the ability to train the workforce is paramount to keeping and attracting business. Raising the 6 mill cap runs counter to that philosophy.

Hayes: There are certain protections for business property taxpayers in SC. In addition to the caps discussed in question 2 above, we also have a 15% cap on how much property taxes can increase in a five year reassessment period. What is needed is a comprehensive overhaul of our entire tax structure, with a view at making the tax burden more fairly distributed among the taxpayers.

Short: I don’t believe that Act 388 could have caused commercial property taxes to be 2-3 times higher than nearby communities. If they are, they must have been prior to the adoption of Act 388 since caps are included in the law. Neither BEA nor DOR will address blanket statements like this, but can respond to specific criteria on individual parcels. Owner occupied property is the only one of the 11 classes of property that have ever been broken out in revenue reports. All classes will be reported separately beginning Jan., 2009.


#4: Would you actively support the development of a comprehensive statewide tax policy reform that ensures fairness, stability and predictability for all tax payers? Please give the reason(s) for your answer.

Delleney: Yes. I would support a comprehensive statewide tax policy reform. Property taxes penalized success and are the most regressive of all taxes.

Gullick: Yes. Our tax laws now are a patchwork of fees that result in a counterproductive situation, especially for businesses.

Kirsh: Has been tried a good many times and has always failed. I see no change at this time.

Moss: I would be in favor of a tax policy that is equitable and fair for all citizens. It is a common sense approach that leaves no one demographic shouldering the tax burden.

Mulvaney: Yes. The unintended consequence of Act 388 was to shift a disproportionate tax burden onto business. That impact continues to weigh on economic development, growth, jobs, and the overall health of our local and state economy.

Simrill: Yes, I do support a statewide tax policy reform that ensures fairness to all taxpayers. Our citizens work hard to keep Government running. It is up to the elected public servants to make sure that our tax system is fair, equitable and taxes are kept as low as possible.

Hayes: Yes, for the reasons set forth in answer to question 3. Trying to tackle this problem in any other manner than a comprehensive approach will probably only make matters worse, as was the case with Act 388.

Short: I have supported comprehensive tax review and change since my election in 1992. I’m retiring now, and unfortunately, it hasn’t happened yet! Tax exemptions need to be reviewed and changed when no longer appropriate. Some services probably need to be added as well. State funding of education would certainly help address inequities in both tax rates and educational offerings.

Hayes: I voted to eliminate the six mill cap for the county’s four districts. Since Act 388 already provided a cap on millage increase in all SC school districts (as well as cities and counties) of CPI plus population growth, a local cap is no longer needed.

Short: I voted to remove the 6 mill cap. I hope for state funding of education but until that occurs, I do not object to local taxing authority within the limits established by Act 388. Those limits should be periodically reviewed and adjusted.

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