Cainhoy, Daniel Island are overtaxed

South Carolina has an existing tax inequity that must be addressed. While blame rests with both the state and local government, it is our local governments that are receiving taxpayer funded windfalls and dragging their collective heels at finding a solution.

The problem occurs when cities, school districts or special-purpose districts include property within adjoining counties that reassess at different times. Homeowners end up unwittingly paying millions of dollars more than they should have paid. How does this happen?

Counties are scheduled to reassess property every five years. After a reassessment is complete, local governments are required to adjust their millage based on the new property values — without reaping a windfall. This is called 'equalization.' In the case of a city that lies within two counties, the problem is particularly egregious.

When one county undergoes reassessment, and the other county does not, the homes within the city/county that has reassessed are taxed at their newly assessed value. Yet homes that are in the same city, but in the adjoining county that has not reassessed, remain at their existing value. The result is that recently reassessed property is taxed without the benefit of 'equalization.'

A local example is the Cainhoy/Daniel Island area. Cainhoy and Daniel Island are in Berkeley County, but were annexed into the City of Charleston. However, a majority of the City of Charleston is in Charleston County so the city uses Charleston County's reassessment figures.

Berkeley County reassessed property in 2008 and the value of most property and homes in the Cainhoy/Daniel Island area increased at or near the 15 percent cap allowed by law. According to Charleston officials, 'The state timetable schedules Charleston County to mail out Reassessment Notices no later than Sept. 30, 2010 with values as of Dec. 31, 2008. Last year Charleston County Council authorized, as permitted by state law, a one-year delay in the mailing out of Reassessment Notices to no later than Dec. 31, 2011.'

So for at least two years homeowners in the City of Charleston, but in Berkeley County, are paying taxes on a higher home value — without the corresponding citywide adjustment that will happen when Charleston County is reassessed.

The result for the average homeowner in the Cainhoy/Daniel Island area over the two year period is a tax increase from approximately $600 up to thousands of dollars a year. Meanwhile, the City of Charleston is receiving a windfall of millions of dollars. That is simply not right.

Last year, this blatant inequity was brought to the attention of city and county officials. They expressed sympathy but cited a provision of law stating that all portions of a district must have a single tax rate.

While I feel this is an extremely narrow interpretation that allows them to reap a windfall without having to explore other options, I determined to work for a solution.

First, I introduced legislation that would require a district/municipality to receive all reassessments before applying them. In effect, a municipality would continue using the old assessment until the second county caught up. The county and municipal associations promptly opposed this effort. In short, it can be done, but they do not like it.

So instead of pushing that legislation, I worked with them to find a solution. The result was a bill that allows for a 'blended millage' — a slight change to the millage as a result of those properties that had been reassessed. And while I do not believe this is particularly fair either, it was at least movement in the right direction. The legislation passed the House but was killed in the Senate.

Then, in an attempt to make matters worse, Charleston County officials asked the legislative delegation to introduce local legislation that would allow it to extend reassessment for another year. Officials cited the 'data conversion process' as the reason for needing to postpone the 'countywide property tax equalization and reassessment program.' Fortunately members of the Legislative Delegation recognized the unfairness of further delaying reassessment and the effort was defeated.

Berkeley County, with presumably similar problems and much less staff than Charleston, completed its reassessment on time.

In short, conversations with city and county officials have been generally fruitless. So it is time for the taxpaying public to get involved. I honestly believe that residents and property owners in school districts, special service districts and municipalities that span two counties and are assessed at different times could potentially bring suit against the city and state for these inequities.

I feel strongly that these same government entities (and their associations) should work with me to rectify the situation instead of accepting what is clearly a windfall while claiming ignorance and covertly fighting against solutions. And in the meantime, locally, the City of Charleston should either implement a tax credit for those whose money has been unfairly taken, or cease using Berkeley County reassessment figures until all properties within the city have been reassessed.

I will again file legislation to address this situation when the General Assembly reconvenes.

Jim Merrill, a Republican, represents District 99 (parts of Berkeley and Charleston counties) in the S.C. House of Representatives.