South Carolina General Assembly
111th Session, 1995-1996

Bill 3651


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Bill Number:                       3651
Type of Legislation:               General Bill GB
Introducing Body:                  House
Introduced Date:                   19950222
Primary Sponsor:                   H. Brown 
All Sponsors:                      H. Brown 
Drafted Document Number:           jic\5434htc.95
Companion Bill Number:             519, 3622
Residing Body:                     Senate
Current Committee:                 Finance Committee 06 SF
Date of Last Amendment:            19950323
Subject:                           Property Tax Credit Fund



History


Body    Date      Action Description                       Com     Leg Involved
______  ________  _______________________________________  _______ ____________

Senate  19960313  Recommitted to Committee                 06 SF
Senate  19960222  Debate adjourned
Senate  19950524  Made Special Order
Senate  19950509  Recalled from Committee,                 06 SF
                  placed on the Calendar
Senate  19950329  Introduced, read first time,             06 SF
                  referred to Committee
House   19950328  Read third time, sent to Senate
House   19950323  Read second time
House   19950323  Amended: amendment No. 23
                  reconsidered and tabled
House   19950322  Amended, debate interrupted
                  by adjournment
House   19950321  Committee report: Favorable with         30 HWM
                  amendment
House   19950222  Introduced, read first time,             30 HWM
                  referred to Committee

View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

Indicates Matter Stricken
Indicates New Matter

RECALLED

May 9, 1995

H. 3651

Introduced by REP. H. Brown

S. Printed 5/9/95--S.

Read the first time March 29, 1995.

STATEMENT OF ESTIMATED FISCAL IMPACT

1. Estimated Cost to State-First Year$See Below

2. Estimated Cost to State-Annually Thereafter$See Below

Department of Education

Section 1 requires an appropriation of an amount sufficient to reimburse local governments sums equal to the amount of collections; therefore, there would be no impact on funding. Given the dictates of this legislation, appropriations to the Property Tax Relief Fund may be limited to the extent necessary to fully fund the Education Finance Act inflation factor as calculated of the Office of Research and Statistical Services.

Department of Revenue

The bill would have no administrative impact to the General Fund of the State by the Department of Revenue.

Comptroller General - Administration

The Comptroller General's Office indicates that since the bill requires reimbursement of state funds to local entities, a field audit of each county must be completed to verify the amount of taxes lost. The bill does not address auditing procedures; therefore, if the Comptroller General's Office is required to conduct audits on these funds, an estimated recurring cost of $41,620 would be required. (This cost is based on salary and fringe of $35,000 and travel expenses of $6,620.) Other costs involved in implementing this legislation would be an estimated non-recurring cost of $10,000. (This cost is based on training, travel, forms, and printing.)

COSTS TO IMPLEMENT BY

COMPTROLLER GENERAL$51,620 (First Year)

$41,620 (Recurring)

$10,000 (Non-recurring)

$41,620 (Second Year)

Aid to Subdivisions - Homestead Exemption

House Bill 3361, the 1995-96 General Appropriation Bill, as passed by the House of Representatives, appropriates in Section 68A, $129,250,000 to the Property Tax Relief Fund. In addition, House Bill 3645, as passed by the House of Representatives, appropriates $54,591,247 to the fund, as referenced in Section 128 of the 1994-95 General Appropriation Act.

Local Governments

Pursuant to Section 2-7-76 of the South Carolina Code of Laws, 1976, the Office of State Budget surveyed the 61 members of the FIST Network and 27 responses were received. Information was solicited regarding the impact associated with the following provisions of the bill: (1) reassessment every four years; (2) issuance of new tax bills; and (3) public notice advertisement. The 15 counties responding indicated costs ranging from $35,944 to $1,361,600 for a total cost of $4,322,101. The 12 municipalities responding indicated costs ranging from $250 to $1,500 for a total cost of $8,028. The combined total cost of the 27 respondents is $4,330,129.

Based on this survey, it would appear that this bill exceeds the ten cents per capita statewide criteria as set forth in Section 4-9-55 of the South Carolina Code of Laws, 1976.

Prepared By: Allan Kincaid

DeAnne Raven Chief Budget Analyst

JoAnne L. Payton

Frances H. Barr Approved By:

Cheryl H. Morris George N. Dorn, Jr.

State Budget Analysts Director, Office of State Budget

STATEMENT OF ESTIMATED FISCAL IMPACT

This bill would increase state expenditures by the amount of the State Property Tax Relief Fund.

Section 11 would require local treasurers to credit the tax paid against the actual liability of the taxpayer if taxes are paid in error. This would have no effect on state or local revenue.

We estimate that Section 12 would shift approximately 4,700 homes from a 6% assessment ratio into the 4% category. This would shift approximately $2,500,000 in local property tax burden to other classes of property if local governments do not take this into account in setting millage rates for the next budget year.

Section 14 would extend the deadline for filing for agricultural use value for the 1994 tax year until January 15, 1996. This would reduce local property tax revenue by less than $1,000 on a one-time basis for refunds to taxpayers who missed the agricultural use filing deadline for 1994.

Approved By:

Burnet R. Maybank, III

S.C. Department of Revenue

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 11-11-330 SO AS TO ESTABLISH THE STATE PROPERTY TAX CREDIT FUND AND REQUIRE ANNUAL APPROPRIATIONS TO THE FUND; TO AMEND THE 1976 CODE BY ADDING SECTION 12-37-251 SO AS TO ALLOW A HOMESTEAD EXEMPTION FROM PROPERTY TAXES OTHER THAN THOSE LEVIED FOR BONDED INDEBTEDNESS EQUAL TO TWENTY-EIGHT THOUSAND FIVE HUNDRED DOLLARS OF FAIR MARKET VALUE ESCALATING, DEPENDING ON REVENUES IN THE STATE PROPERTY TAX CREDIT FUND TO A COMPLETE EXEMPTION FROM ALL TAXES EXCEPT THOSE LEVIED FOR BONDED INDEBTEDNESS; TO AMEND THE 1976 CODE BY ADDING SECTION 12-43-217 SO AS TO REQUIRE TRIENNIAL REASSESSMENT; TO AMEND THE 1976 CODE BY ADDING SECTIONS 4-9-142, 5-21-70, 6-1-75, AND 59-73-35 SO AS TO IMPOSE SPENDING LIMITS ON COUNTIES, MUNICIPALITIES, AND SPECIAL PURPOSE DISTRICTS AND IMPOSE AN AD VALOREM TAX REVENUE LIMITATION ON SCHOOL DISTRICTS; TO AMEND THE 1976 CODE BY ADDING SECTION 12-43-350 SO AS TO PROVIDE A STANDARDIZED TAX BILL; AND TO AMEND THE 1976 CODE BY ADDING SECTION 6-1-60 SO AS TO PROVIDE FOR NOTICE REQUIREMENTS FOR LOCAL GOVERNMENT BUDGETING.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Article 3, Chapter 11, Title 11 of the 1976 Code, is amended by adding:

"Section 11-11-330. (A) Funds credited to the `State Property Tax Relief Fund' must be used to provide property tax relief in the manner prescribed in Section 12-37-251. The first phase of property tax relief must be to remove that portion of the homeowner's tax levied for public school operating costs. For fiscal years beginning after June 30, 1996, the General Assembly shall, in addition to the funds referenced, appropriate one-half of the estimated recurring revenue growth expected for the fiscal year until such time that the phase-out of the residential property tax is complete. For fiscal years after the implementation of the phase-out of the residential property tax, the General Assembly shall appropriate an amount sufficient to reimburse local governments sums equal to the amount of taxes that were not collected for the local government by reason of the exemption provided in Section 12-37-251.

(B) This appropriation required by subsection (A) must be contained in the executive budget, Ways and Means Committee report on the general appropriations bill, the general appropriations bill at the time of third reading in the House of Representatives, the Senate Finance Committee report on the general appropriations bill, the general appropriations bill at the time of a third reading in the Senate, and in any conference report on the general appropriations bill."

SECTION 2. Article 3, Chapter 37, Title 12 of the 1976 Code, is amended by adding:

"Section 12-37-251. (A) Property classified pursuant to Section 12-43-220(c) is exempt from property taxes levied for other than bonded indebtedness and payments pursuant to lease-purchase agreements for capital construction as provided in this subsection. For the 1995 property tax year, the exemption applies against millage imposed for school operations and the amount of fair market value of the homestead that is exempt from such millage must be set by the Director of the Department of Revenue and Taxation and the Comptroller General by September 30, 1995, based on the amount available in the State Property Tax Relief Fund for fiscal year 1995-96 applying the reimbursement requirements of this section. In subsequent tax years, after the first phase as stated in Section 11-11-330(A) and its growth is funded, the exemption extends to all operating millages on homesteads and the amount of fair market value exempt from tax must be established by the Director of the Department of Revenue and Taxation and the Comptroller General by September thirtieth of the year based on the amount available in the Property Tax Relief Fund for the fiscal year applying the reimbursement requirements of this section. It is the intention of the General Assembly annually and cumulatively to provide funds in the State Property Tax Relief Fund so that the percentage of fair market value exempt pursuant to this section attains and thereafter remains at one hundred percent of fair market value. The exemption allowed by this section is in addition to the exemption provided in Section 12-37-250.

(B) Taxing entities must be reimbursed, in the manner provided in Section 12-37-270 for the revenue lost as a result of the homestead exemption provided in this section except that ninety percent of the reimbursement must be paid in the last quarter of the calendar year.

(C) Notwithstanding any other provision of law, property exempted from property taxation in the manner provided in this section is considered taxable property for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State, and for purposes of computing the `index of taxpaying ability' pursuant to Section 59-20-20(3).

(E) In the year of reassessment the millage rate for all real and personal property must not exceed the rollback millage as disclosed in Section 6-1-80(B)(10), except that the rollback millage may be increased by the percentage increase in the consumer price index for the year immediately preceding the year of reassessment.

(F) The exemption allowed by this section is conditional on full funding of the Education Finance Act and on an appropriation by the General Assembly each year reimbursing school districts an amount equal to the Department of Revenue and Taxation's estimate of total school tax revenue loss resulting from the exemption in the next fiscal year."

SECTION 3. A. Article 3, Chapter 43, Title 12 of the 1976 Code is amended by adding:

"Section 12-43-217. Notwithstanding any other provision of law, once every fourth year each county or the State shall appraise and equalize those properties under its jurisdiction. Upon completion of the reassessment program, the county or State shall notify every taxpayer of any change in value or classification if the change is one thousand dollars or more. The county and State shall have one year to resolve appeals in value or classification. In the fifth year, the county or State shall implement the program and assess all property on the newly appraised values."

B. Subsection (A) of Section 12-45-75 of the 1976 Code, as added by Act 443 of 1994, is amended to read:

"(A) The governing body of a county may by ordinance allow a taxpayer to elect to pay all ad valorem taxes on real property located in the county in quarterly installments. No installment election is allowed for taxes paid through an escrow account.

The ordinance must specify the installment due dates and it may provide for installments due and payable before January fifteenth, but the final installment due date must be January fifteenth. The ordinance may provide for a service charge of not more than two dollars on installment payments. For purposes of payment and collection, these service charges are deemed property taxes. The ordinance may not provide penalties for late installments."

SECTION 4. Article 1, Chapter 9, Title 4 of the 1976 Code is amended by adding:

"Section 4-9-142. (A) The governing body of a county may not increase the millage rate and fee rates imposed for operating purposes, excluding utilities, above the rates imposed for such purposes for the prior tax year. However, the millage rate and fee rates may be increased by the percentage increase in the Consumer Price Index upon a three-fifths vote of the governing body of the county. Notwithstanding the limitation upon millage rate and fee rate increases contained in this subsection, the millage rate and fee rates may be increased for the following purposes:

(1) in response to a natural or environmental disaster as declared by the Governor;

(2) to offset a prior year's deficit, as required by Section 7, Article X of the South Carolina Constitution, or to offset a deficit in providing a service or function which is funded through the imposition of fees by increasing such fees in an amount necessary to cover that deficit; or

(3) to raise the revenue necessary to comply with judicial mandates requiring the use of county funds, personnel, facilities, or equipment.

(B) Notwithstanding any provision of the law to the contrary, the millage rate and fee rates may be further increased upon a two-thirds vote of the governing body. Any new sources of revenues for operating purposes must be approved by a two-thirds vote of the governing body of the county. However, if the governing body has fewer than six members, a three-fifths vote is required.

(C) The restriction contained in this section shall not affect millage which is levied to pay bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account. Nothing in this section prohibits the use of energy-saving performance contracts as provided in Section 48-52-670."

SECTION 5. Article 1, Chapter 21, Title 5 of the 1976 Code is amended by adding:

"Section 5-21-70. (A) The governing body of a municipality may not increase the millage rate and fee rates, excluding utilities, imposed for operating purposes above the rate and fee rates imposed for such purposes for the prior tax year. However, the millage rate and fee rates may be increased by the percentage increase in the Consumer Price Index upon a three-fifths vote of the governing body of the municipality. Notwithstanding the limitation upon millage rate and fee rate increases contained in this subsection, the millage rate and fee rates may be increased for the following purposes:

(1) in response to a natural or environmental disaster as declared by the Governor;

(2) to offset a prior year's deficit, as required by Section 7, Article X of the South Carolina Constitution, or to offset a deficit in providing a service or function which is funded through the imposition of fees by increasing such fees in an amount necessary to cover that deficit; or

(3) to raise the revenue necessary to comply with judicial mandates requiring the use of municipal funds, personnel, facilities, or equipment.

(B) Notwithstanding any provision of the law to the contrary, the millage rate and fee rates may be further increased upon a two-thirds vote of the governing body. Any new sources of revenues for operating purposes must be approved by a two-thirds vote of the governing body of the municipality. However, if the governing body has fewer than six members, a three-fifths vote is required.

(C) The restriction contained in this section shall not affect millage which is levied to pay bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account. Nothing in this section will prohibit the use of energy-saving performance contracts as provided in Section 48-52-670."

SECTION 6. Article 1, Title 6 of the 1976 Code is amended by adding:

"Section 6-1-60. (A) The governing body authorized by law to levy special purpose or public service district taxes may not increase the millage rate imposed for operating purposes above the rate imposed for such purposes for the prior tax year. The millage rate may, however, be increased by the percentage increase in the Consumer Price Index upon a three-fifths vote of the governing body authorized by law to levy special purpose or public service district taxes. Notwithstanding the limitation upon millage rate increases contained in this subsection and only to the extent authorized by law on the effective date of this section, the governing body authorized by law to levy special purpose or public service district taxes may increase the millage rate for the following purposes:

(1) in response to a natural or environmental disaster as declared by the Governor;

(2) to offset a prior year's deficit, as required by Section 7, Article X of the South Carolina Constitution; or

(3) to raise the revenue necessary to comply with judicial mandates requiring the use of special purpose or public service district funds, personnel, facilities, or equipment.

(B) The millage rate may be further increased upon a two-thirds vote of the governing body authorized by law to levy special purpose or public service district taxes. Any new sources of revenues for operating purposes must be approved by a two-thirds vote of the governing body authorized by law to levy special purpose or public service district taxes. However, if the governing body has fewer than six members, a three-fifths vote is required.

(C) The restriction contained in this section shall not affect millage which is levied to pay bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account.

(D) The provisions of this section may not be construed to amend or repeal any existing provision of law limiting the fiscal autonomy of a public or special purpose district to the extent those limitations are more restrictive than the provisions of this section."

SECTION 7. Chapter 73, Title 59 of the 1976 Code is amended by adding:

"Section 59-73-35. (A) The governing body authorized by law to levy school taxes may not increase the millage rate imposed for operating purposes above the rate imposed for such purposes for the prior tax year.

(B) The millage rate may, however, be increased by the percentage increase in the Consumer Price Index upon a three-fifths vote of the governing body authorized by law to levy school taxes of the school district. Notwithstanding the limitation upon millage rate increases contained in this subsection, the millage rate may be increased for the following purposes:

(1) to meet the minimum required local Education Finance Act inflation factor as projected by the State Budget and Control Board, Division of Research and Statistics, and the per pupil maintenance of effort requirement of Section 59-21-1030;

(2) in response to a natural or environmental disaster as declared by the Governor;

(3) to offset a prior year's deficit, as required by Section 7, Article X of the South Carolina Constitution; or

(4) to raise the revenue necessary to comply with judicial mandates requiring the use of school district funds, personnel, facilities, or equipment.

(C) Notwithstanding any provision of law to the contrary, the millage rate may be increased upon a two-thirds vote of the governing body authorized by law to levy school taxes of the school district. Any new sources of revenues for operating purposes must be approved by a two-thirds vote of the governing body authorized by law to levy school taxes of the school district.

(D) The restriction contained in this section shall not affect millage which is levied to pay bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to maintain a reserve account. Nothing in this section prohibits the use of energy-saving performance contracts as provided in Section 48-52-670.

(E) The provisions of this section may not be construed to amend or repeal any existing provision of law limiting the fiscal autonomy of a school district to the extent those limitations are more restrictive than the provisions of this section.

(F) The provisions of this section do not apply to a school district in which any increase in the ad valorem school tax levy for a particular year must be approved by the qualified electors of the school district in a referendum."

SECTION 8. Article 3, Chapter 43, Title 12 of the 1976 Code is amended by adding:

"Section 12-43-350. Affected political subdivisions must use a tax bill which must contain standard information and include the following:

(1) name and address of owner;

(2) tax map number;

(3) location of property;

(4) appraised value;

(5) assessed value;

(6) assessed ratio;

(7) millage for each tax district;

(8) receipt number;

(9) total tax liability for current year;

(10) state property tax relief benefit (savings);

(11) local option sales tax credit."

SECTION 9. Chapter 1, Title 6 of the 1976 Code is amended by adding:

"Section 6-1-80. (A) The counties, municipalities, special purpose, or public service and school districts of this State must provide notice to the public by advertising the public hearing before the adoption of its budget for the next fiscal year in the nonclassified section in at least one South Carolina newspaper of general, audited circulation in the area. The public hearing must give the residents of the jurisdiction the opportunity to express their concerns and to provide ideas or input for discussion by the local governing entity. This notice must be given not less than fifteen days in advance of the public hearing, and must be a minimum of two columns by ten inches (four and one-half by ten inches) with at least a twenty-four point headline.

(B) The notice shall include the following:

(1) the governing entity's name;

(2) the time, date, and location of the public hearing on the budget;

(3) the total, actual, and projected expenditures of the current operating fiscal year in the budget of the governing entity;

(4) the proposed total projected operating expenditures for the next fiscal year as proposed in next year's budget for the governing entity;

(5) the proposed or estimated percentage change in operating budgets between the current fiscal year and the proposed budget;

(6) the total, actual, and projected revenue of all property taxes in dollars for the current fiscal year budget;

(7) the proposed total projected revenue of all property taxes in dollars for the proposed budget;

(8) the millage for the current fiscal year;

(9) the proposed millage as proposed in the budget for the next fiscal year;

(10) the rollback millage rate, computed by dividing the current year's property tax revenues by the budget year property tax assessment base;

(11) any new fees or taxes that would affect more than five percent of the total proposed budget; and

(12) estimated local option sales tax credit, if applicable.

(C) The requirements of this section apply in the preparation of annual budget and supplemental appropriations. When the counties, municipalities, and special purpose or public service districts, and school districts determine that they require a greater tax rate after the adoption of the budget or during the current fiscal year, or fail to provide notice within the above-specified period, they also must comply with the notice requirements of this section."

SECTION 10. There shall be established a committee which shall be known as the "Joint Ad Hoc Committee on Unfunded Mandates" (hereinafter the "committee"). The committee shall be composed of three members appointed from the House of Representatives by the Speaker of the House of Representatives, three members appointed from the Senate by the President of the Senate, and three members appointed by the Governor. The committee shall investigate and review the role of unfunded mandates and their impact on the counties of this State. The committee shall hold public hearings and report to the General Assembly with specific recommendations on the repeal or modification of all unfunded mandates in existence as of July 1, 1995. The committee's consideration of unfunded mandates shall include, but is not limited to, those mandates imposed by statute, regulation, and judicial interpretation. The committee shall issue a report and make its recommendations to the General Assembly prior to the commencement of the Second Session of the 111th General Assembly. Upon issuing its report, the committee terminates.

SECTION 11. The 1976 Code is amended by adding:

"Section 12-47-75. If a taxpayer or his agent pays property taxes in error, or the payment is erroneously credited, the treasurer shall credit the amount paid against the actual liability of the taxpayer for the tax year in question. This section applies for any tax year for which proof is provided."

SECTION 12. A. The first paragraph of Section 12-43-220(c) of the 1976 Code, as last amended by Act 164 of 1993, is further amended to read:

"The legal residence and not more than five acres contiguous thereto, when owned totally or in part in fee or by life estate and occupied by the owner of the interest, is taxed on an assessment equal to four percent of the fair market value of the property. If residential real property is held in trust and the income beneficiary of the trust occupies the property as a residence, then the assessment ratio allowed by this item applies if the trustee certifies to the assessor that the property is occupied as a residence by the income beneficiary of the trust. When the legal residence is located on leased or rented property and the residence is owned and occupied by the owner of a residence on leased property, even though at the end of the lease period the lessor becomes the owner of the residence, the assessment for the residence is at the same ratio as provided in this item. If the lessee of property upon which he has located his legal residence is liable for taxes on the leased property, then the property upon which he is liable for taxes, not to exceed five acres contiguous to his legal residence, must be assessed at the same ratio provided in this item. If this property has located on it any rented mobile homes or residences which are rented or any business for profit, this four percent value does not apply to those businesses or rental properties. This subsection (c) is not applicable unless the owner of the property or his agents make written application apply therefor to the county assessor on or before the first penalty date for taxes due for the first tax year in which the assessment under this article is made and certify to the following statement: `Under the penalty of perjury I certify that I meet the qualifications for the special assessment ratio for a legal residence as of January first of for the appropriate tax year'.

To qualify for this special assessment ratio, the owner-occupant must have actually occupied the residence, prior to the date of application, for some period during the tax year and remain an owner-occupant at the time of application. However, when a new or renovated residential property has been certified for occupancy after the beginning of a tax year, the property must be assessed as provided in item (e) on the unimproved value of the property."

B. This act takes effect upon approval by the Governor and applies with respect to property tax years beginning after 1994.

SECTION 13. Section 11-11-440(A) of the 1976 Code is amended to read:

"(A) The General Assembly may not provide for any general tax increase or enact new general taxes in the permanent provisions of the State General Appropriation Act or acts supplemental thereto, and any such general tax increases or new general taxes must be enacted only by separate act passed by a vote of at least two-thirds of the members of each house."

SECTION 14. Notwithstanding the provisions of Section 12-43-220(d)(3) of the 1976 Code, the deadline for filing for agricultural use value for property owned as of December 31, 1993, is extended to January 15, 1996.

SECTION 15. This act takes effect upon approval by the Governor.

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