The house proposal has been tabled, therefore, we are now on another proposal by Sen. Larry Grooms. Keep in mind that there will be winners and losers in all property tax reform proposals. When the homeowner is the winner, I’m all ears!
Groom Broom II
Below are the highlights:
All state funds go directly to local school districts then they fund state department as they see fit. Instead of local schools begging for money, the State Department would have to beg the districts for money.
Establishes the School Trust Fund and distributes its proceeds to all school districts on a weighted pupil basis. Removes Local School Operation Property Taxes off all classes of property except for school districts eligible for the hold harmless provision of this amendment.
Substitution taxes for local school operation taxes are derived from:-2 cent increase in the state sales and use tax-Deed recording fee increase equal to the existing deed recording fee-Redirects inventory tax and manufacturer’s depreciation tax reimbursements to the School Trust Fund-Creates statewide property tax of 75 mills for all classes of property except owner occupied homes

I voted in favor of the The Groom Broom yet it was tabled, therefore, we will now examine the House plan. The motion to table the house plan came to a tie and the Lt. Governor cast “no” to table. The Senate is now debating the House plan. This plan increases sales taxes to 7% and totally eliminates property taxes from owner occupied homes (primary residences) except for school bond indebtedness. This bill will remove a large majority of your property taxes on your home. Does this bill create problems? Absolutely, but we’ll do our best to resolve the problems. The benefits far outweigh the shortcomings. You will own your home, not rent from the government.

What’s good about the House plan:
-eliminates just about all of the taxes on owner occupied homes
-exempts accommodations tax increase and food tax increase

What’s bad about the House plan:
-business property tax remains
-car taxes remain
-distribution will have winners and losers

Today, Sen. Larry Grooms offered a plan with sweeping property tax reforms. I call it the Groom Broom. Keep in mind that there will be winners and losers in all property tax reform proposals. When the homeowner is the winner, I all ears!

Below are the highlights
Establishes the School Trust Fund and distributes its proceeds to all school districts on a weighted pupil basis.

Provides a circuit-breaker tax credit for property taxes paid in excess of 2% of the adjusted gross household income for homestead eligible owner occupied homes.

Removes Local School Operation Property Taxes off all classes of property except for school districts eligible for the hold harmless provision of this amendment.

Hold harmless provision allows school districts which would receive less revenue under this plan to collect a local property tax for the deficit amount on all classes of property except for owner occupied homes for an amount not to exceed the prior years total state and local revenues adjusted by a growth factor as determined by the BEA.

Redirects EIA and EFA funding sources into the School Trust Fund and directs additional revenue generated by the local school tax substitution into the School Trust Fund.

Substitution taxes for local school operation taxes are derived from:
-2-cent increase in the state sales and use tax.
-Surtax on beer, wine, alcoholic liquors equal to the existing surtax.
-Cigarette tax increase of $0.93 cents per pack.
-Deed recording fee increase equal to the existing deed recording fee.
-Redirects inventory tax and manufacturer’s depreciation tax reimbursements to the School Trust Fund.
-Increases sales tax cap on automobiles to $900.
-Creates statewide property tax of 42 mills for all classes of property except owner occupied homes.

Removes a limited number of specific sales tax exemptions which include:
-Newsprint paper and newspapers.
-Direct mail promotional advertising and postage used for advertising services.
-Charges for telegraph messages, carrier access and access line charges established by FCC and SC PSC.
-Supplies used for consumption aboard ships in intercoastal trade or foreign commerce.
-Bags, wrapping paper, containers used in the sale of a product.
-Supplies, technical equipment and machinery sold to radio, cable and television stations.
-Motion picture film sold to or rented by theaters.
-Railroad cars, locomotives and monorails; engines and parts used to propel them.
-Vehicle extended service contracts and warranties.Clothing used in Class 100 clean air environments.

There are 2 very important things to remember:
1-You will continue to get a property tax bill on your home. All of the proposals only eliminate the school operating expense in exchange for an increase in sales taxes. The school operating expense is the lion’s share of your tax bill. You will continue to be taxed to fund local government and bonded indebtedness. Since local governments and school bond indebtedness are so vastly different in each county and school district, it is virtually impossible to create a distribution formula from the state level.

2-What will prevent an increase in the remaining property taxes? This is my biggest fear. 20 years from now, will the remaining property taxes creep back up? Then we have high property taxes and high sales taxes. There are some millage caps and assessment caps, but will these be enough? There is very little effort to slow down the ever increasing appetite for spending from government at all levels.

Stay tuned.

Well, it’s property tax week in the Senate. At this point, it may be helpful to discuss exactly what we’ll be voting on and exactly what we won’t be voting on. As most of you know, the Senate rejected the House plan out of hand.
The House bill morphed, however, into one full cent added to the sales tax in return for the elimination of school operating taxes on owner-occupied homes valued at up to $180,000. The bill removes of that same property tax on most (not all) cars and, finally, a circuit breaker. The circuit breaker does this: It prevents anyone from paying more than 5% of their gross household income, as defined on their federal tax return, in property tax on their primary residence.

We’ll see plenty of amendments to the bill over the next few days, and I’ll vote for the ones that actually reduce property tax. I won’t vote for ones that perform a bait and switch, that is remove property tax in favor of a new tax that actually increases your overall burden. An example of this would be an open-ended plan to bring school funding to the state level without a defined method of redistribution. Such a plan might actually increase your tax burden if the redistribution plan turned out to require more money than taxpayers currently pay for school operations.