Gov. Mark Sanford signed South Carolina’s property tax overhaul on Saturday, according to the Legislature’s record for the bill, H. 4449. It shifts the cost of running public schools away from homeowners’ property tax bills and onto a new statewide sales tax.
Starting with property tax years after 2006, owner-occupied homes that get the special residential assessment ratio are exempt from all property taxes levied for school operations, the law says. Homeowners will still pay school millage that repays general obligation debt.
The exemption covers only owner-occupied homes. Commercial and industrial property, rental houses and other property that doesn’t qualify for the residential ratio stay on the school operating tax rolls.
To replace the money, the law adds a one-cent sales, use and casual excise tax beginning June 1, 2007. The extra penny won’t apply to the tax on hotel rooms and other lodging, to items whose sales tax is capped by state law, or to unprepared food that can be bought with food stamps.
That revenue goes to a new Homestead Exemption Fund, which will reimburse school districts for the lost property taxes.
Grocery shoppers get a separate break sooner. On Oct. 1, the state sales tax on unprepared food eligible for food stamps falls to 3%, a two-point cut, the law says.
The law also limits local governments. Beginning Jan. 1, 2007, a local governing body can raise its operating millage only by the previous year’s increase in the consumer price index plus its population growth, with some exceptions.
It also caps how much a property’s taxable value can rise from countywide reassessment at 15% over five years, but only if voters ratify a related amendment to the state constitution in the November general election, the law says. The cap doesn’t apply to new improvements, or to a property that has changed hands, in the year its new value is first taxed.
The House gave the bill second reading 86 to 31 in February. Both chambers adopted a final compromise written by a conference committee on May 31.
