As sales tax income falls, property taxes rise
By David Slade
Embattled local governments have been loath to raise property taxes during this recession, but in Charleston and Berkeley counties, property tax bills will rise this year just the same.
Blame the economy.
Sales tax collections have fallen off a cliff, and that money pays for property tax relief in the 31 South Carolina counties where voters have approved local option sales taxes.
When sales tax collections fall, a decline in property tax credits follows, and the amount due on tax bills rises.
Charleston County, for example, has cut its estimates for Local Option Sales Tax receipts by $7 million for the budget year that starts in July, and property owners will see the difference on tax bills this fall.
The additional tax won't add up to very much for an individual homeowner, but it's one more example of how this recession is extracting a cost from everyone, even those fortunate enough to have maintained their jobs, homes and savings.
"People are feeling everything now, whether it's taxes or it's at the grocery store," said Gerald Babbs, a homeowner in downtown Charleston. "It just adds up. It's everything."
This recession has shown the risk of governments relying heavily upon sales taxes.
In Columbia, state lawmakers have been slashing spending, resulting in employee furloughs and reduced
services, partially due to South Carolina's heavy reliance on sales tax revenue.
The statewide property tax reforms of 2006, which exempted homeowners from most school taxes, were supposed to be paid for with a penny increase in the statewide sales tax. The result: A shortfall of more than $143 million over the past two years, which made the state's budget problems worse.
Locally, the optional sales taxes that voters approved by referendum in two-thirds of South Carolina counties are used to offset town, city and county taxes.
The difficulty for local governments comes in projecting sales tax revenues up to a year ahead of time, and crediting those amounts to property tax bills. If they guess wrong, they come up short.
"That was our problem," said Keith Bustraan, Charleston County deputy administrator and chief financial officer. "We set our revenue estimate and then began the long slide."
About this time last year, Charleston County estimated that it would get $46 million in local option sales tax during the budget year that ends June 30. The county now estimates it will collect $41 million, and that could prove optimistic.
"We gave away $5 million that we didn't have," Bustraan told County Council on March 11.
Not wanting to make the same mistake again, Bustraan's office is now projecting $39 million in local option money for the coming budget year, and that's how $7 million gets shifted back onto property tax bills.
The roughly 15 percent cut in the credit funded by the sales tax translates to an increase of about $42 on the property tax bill of someone with a home worth $250,000.
In Berkeley County, local option sales tax came in this year $907,458 below estimates.
For the coming budget year, the county hasn't finished making projections but figures the local option tax will raise about the same amount of money as this year, according to Berkeley County Deputy Supervisor Donald B. Boling Jr.
That would mean a nearly 8 percent reduction in the county tax credit compared to last year's property tax bills.
Like the counties, towns and cities have been reducing their local option sales tax credits, which will further increase property tax bills.
The city of Charleston reduced its sales tax credit to $11.7 million last year from $12.1 million in 2007, for example. The city was on target with its 2008 estimate, then further reduced its tax credit to $11 million for this year, according to city Chief Financial Officer Steve Bedard.
The latest reduction would cost a city resident with a $250,000 home an extra $13 on this fall's property tax bill, in addition to the extra $42 that person will be paying the county.
Each city and town will be making its own calculation, and the results will vary, but in every case a drop in sales tax collections should mean an increase in property tax bills.
Reach David Slade at dslade@ postandcourier.com or 937-5552.
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majorjohnson (anonymous) says...
Now that's funny. "We gave away $5 million that we didn't have," Bustraan told County Council on March 11.
These guys make a practice of giving away other peoples money. Now they're crying cause we don't have it. How many crap projects could they have funded with that money? Shame on you taxpayers for not forking over them dollars.
March 22, 2009 at 1:57 a.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
"They need to shove that bum out," he said, referring to President Obama. "I hate seeing them spend my grandchildren's money."
http://www.orlandosentinel.com/news/l...
March 22, 2009 at 9:12 a.m. ( permalink | suggest removal )
ginj (anonymous) says...
"The difficulty for local governments comes in projecting sales tax revenues..." No, the difficulty comes in when our elected officials feel they have a bottomless pit in which to draw from. They need to learn they cannot have everything they like and LEARN TO LIVE WITHING A BUDGET. If you don't have the money, you can't spend it.
March 22, 2009 at 9:23 a.m. ( permalink | suggest removal )
seneca264 (anonymous) says...
I would like to know how much money Berkeley and Charleston County are handing out to the illegals via food stamps and other social give-a-way programs. I am in the process of taking videos outside various DSS offices in the tri-county area. I am also taking videos in certain residential areas. I plan to edit them into a movie that I am going to send to the Post and Courier and Sanford's office. My video will not win any Oscars, but it will clearly point out one reason are property taxes are being raised. I still see illegals working at construction sites right around the corner from me. If all these illegals payed taxes like us, Charleston and Berkeley county would not have to raise property taxes.
March 22, 2009 at 9:31 a.m. ( permalink | suggest removal )
barracho (anonymous) says...
seneca264..has way too much time on his hands.
Property taxes prove that you never really OWN your home. Wait for the fallout with people not being able to pay, even their property tax. Going to be interesting.
Seneca264...you really need to go for some mental help. You are bi-polar on this "illegal" deal. You have no clue what the heck you're talking about. Most of all, you're annoying.
March 22, 2009 at 10:28 a.m. ( permalink | suggest removal )
Snapper (anonymous) says...
I agree seneca264. We gotta get rid of people that are getting benefits in this country that don't even belong here in the first place. That would definately help us out.
March 22, 2009 at 10:33 a.m. ( permalink | suggest removal )
guidedbystewart (anonymous) says...
How can you budget when you not know what your tax revenue going to be? We should have never shifted the tax burden to sales tax!
March 22, 2009 at 10:45 a.m. ( permalink | suggest removal )
johnwen (anonymous) says...
Right on ginj!!!!!! Don't spend what you don't have. It would be a tough year but how about no spending for one year? Then at the end of a year you have your money for the following year. When you run out ....you run out. SC or the county or the town of MT P. can operate the same way. While you're spending from that pool of money at the same time you're collecting for next year's pool of money (no touching that money until the following year). Pretty simple...when you run out, you run out! This spending money based on what you think is going to come in, is senseless. When you run out, you run out. It's how people operate so why doesn't the gov't have to follow the same guidelines. If we NEED money we don't have, we borrow until we become a credit risk...then no more borrowing...the banks won't give us anymore. We're stuck with what we have left to live on. I for one AM FED UP with spending, based on senseless projections, and having my taxes/service fees/whatever.. raised to accommodate. It WILL have to end at some point. Why not do something right now about spending what you don't have.
There...........I feel better now, thanks for listening lol.
March 22, 2009 at 10:50 a.m. ( permalink | suggest removal )
a_set_love (anonymous) says...
Posted by barracho on March 22, 2009 at 10:28 a.m. (Suggest removal)
seneca264..has way too much time on his hands.
Property taxes prove that you never really OWN your home. Wait for the fallout with people not being able to pay, even their property tax. Going to be interesting.
Seneca264...you really need to go for some mental help. You are bi-polar on this "illegal" deal. You have no clue what the heck you're talking about. Most of all, you're annoying..
###############################################################
The truth hurts, doesn't it barracho. If the truth annoys you and your people might well be the thieves seneca264 refers to ...................
March 22, 2009 at 10:52 a.m. ( permalink | suggest removal )
yird (anonymous) says...
"The statewide property tax reforms of 2006, which exempted homeowners from most school taxes,"
==================================
Really? Not according to my tax bills which indicate the major portion of my property taxes being designated to be wasted by the school system on what so many describe as a continuously failing enterprise that produces a sub-standard product.
Fortunately for me I hold a healthy block of bonds issued to finance various school related expenditures that produce tax exempt income far in excess of my property tax liability, so it's no skin of my nose if the idiots keep spending money as if there were no tomorrow.
It just seems like such a terrible waste.
Last time I was aware of the federal contribution to the local school systems it was in the 6-7% range of the total operating budget.
So for 6-7% of total costs, local politicians and school boards have accepted mandates that turns control of the remaining 93-94% of the curriculum over to the Fed.
Not even an old used up prostitute would settle for being controlled to that extent for only 6-7% of the take.
If I'm off about the percentage please feel free to correct me. I'm basing my comment on information from some years back.
March 22, 2009 at 10:57 a.m. ( permalink | suggest removal )
LittleFish (anonymous) says...
Thank goodness the important things like the Aquarium can continue to operate.
March 22, 2009 at 11:39 a.m. ( permalink | suggest removal )
rahard (anonymous) says...
The article appears to be iconoclastic. If no sales tax money, up goes our property taxes. Simple enough. Where tho, does the decreasing value of homes fit in? Does government automatically make the sales tax/property tax increase without adjusting for the decline in home values? Are homeowners going to get stuck for a bill that is essentially sales tax dependent? Why is it not possible for the legislators to simply eliminate an equivalent amount in expenditures commensurate with the decline in sales taxes. Why do legislators automatically assume that they have to FUND everything?
How about reducing property taxes by the percentage of decline in home prices? Why aren't legislators 'championing' this issue? How about reducing Legislator's salaries by the decline in the percentage of sales tax revenue?
March 22, 2009 at 12:01 p.m. ( permalink | suggest removal )
tc1 (anonymous) says...
The problem is not that it is hard to project, though I understand that it is. The problem is that government decides what it wants, not needs, then produces whatever fantasy projection that would provide that want and completely ignore any consequences. Sound like children? This as opposed to a conservative realistic worst case scenario and using any leftover in good years to carry forward to bad times.
March 22, 2009 at 12:08 p.m. ( permalink | suggest removal )
majorjohnson (anonymous) says...
Property taxes are still part of the county budget. The property tax shift was the schools portion, not the county budget portion. I wish people would get that straight. That was a constitutional amendment and a large number of people still don't even understand what it did or what they voted for. That is a totally separate issue from the LOST, which is a county sales tax on top of the state sales tax. The increase in property taxes is to make up for their projection of income from LOST. They thought they would get more than they eventually did, they put that projection in their budget, and now because they overestimated they are going to make the difference up by raising property taxes. This would have happened without regard to the schools portion remaining part of the property tax or not.
March 22, 2009 at 12:09 p.m. ( permalink | suggest removal )
seneca264 (anonymous) says...
Does anyone know if the county will have to adjust the millage rate back down to match the depreciation of your current property value?
March 22, 2009 at 1:17 p.m. ( permalink | suggest removal )
UrGatorbait (anonymous) says...
They get ya comin' and they get ya goin'
I don't see them adjusting the millage rate with a large source of revenue disappearing. What I wonder, well not really, are they going to reset the property tax credit when sales revenues increase and adjust our bills accordingly?
Thanks for the info major. Good stuff.
March 22, 2009 at 1:21 p.m. ( permalink | suggest removal )
nappyd (anonymous) says...
Great so homeowners' tax deductions (since property tax IS deductible) just went up.
That is a good point about housing prices. If they're going down, will a property tax increase make up for the difference from lack of sales tax revenue?
And what happens if people start buying again? Surely those frugal lawmakers would lower one or both of the taxes since their budgets magically realigned, no?
March 22, 2009 at 1:34 p.m. ( permalink | suggest removal )
ginj (anonymous) says...
It's not hard to figure out, but why is the revenue from sales taxes not what they projected? Because of this recession people are being more conservative with their money, that is those who still have a job. So our politicians think, "Hey we need to raise taxes to make more money to make up for the lost revenues!" Instead they should be thinking, "Everyone is cutting back because of the recession, we should as well." Make sense? It does to me and any other NORMAL taxpaying and non-taxpaying person around, but not to politicians.
One more thing, Only the School's Operating Fees were effected on your County tax bills.
March 22, 2009 at 2:11 p.m. ( permalink | suggest removal )
barracho (anonymous) says...
a_set_love......regurgitate is what you do best.
March 22, 2009 at 3:46 p.m. ( permalink | suggest removal )
JTin (anonymous) says...
Wow, how NOT surprising, another excuse to raise taxes in Berkeley county, go figure. There is nothing in Berkeley county, its rotting, No jobs, but yet they raise the taxes. We (the People) cant stop paying taxes when we loose our jobs, run on hard times or the economy takes from us. But yet they (state and local government) can raise taxes when they want, for any excuse they shove in our faces!?
Just more Typical crap from Government, any excuses to squeeze the people for more money and even less to show for it!!!!
March 22, 2009 at 8:22 p.m. ( permalink | suggest removal )
Iknow (anonymous) says...
Everyone wants the services government provides but no one wants to pay for it. Well folks, guess what, there is no such thing as a free lunch. Charleston County has not had a tax increase for years so quit whining!
March 22, 2009 at 9:41 p.m. ( permalink | suggest removal )
majorjohnson (anonymous) says...
Charleston county increased the LOST and passed the 1/2 cent sales tax in the last few years. Not sure what you call that Iknow, but I call it a tax increase. The money they budgeted that never came in was the money from the LOST tax increase. The millions they got from the 1/2 cent tax they are using to take thousands of acres of property off the property tax rolls. Property taxes have to increase to make up for the property taxes that are no longer coming from the land they purchased with your tax dollars.
March 23, 2009 at 12:35 a.m. ( permalink | suggest removal )
moonpie (anonymous) says...
"ass-set-love", your right the TRUTH does hurt doesn't it? Illegals are adrain on our system.
"Seneca", Please let us know where the videos will be published!
Hey councilmen(i use that term lightly)I'll just write a check for the difference for the entire county. You'll take a check won't you? Afterall if the county can give away $5 million it doesn't have, hell I can too!
March 23, 2009 at 6:36 a.m. ( permalink | suggest removal )
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