South Carolina General Assembly
116th Session, 2005-2006

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S. 1291

STATUS INFORMATION

General Bill
Sponsors: Senators Campsen, McConnell, Knotts, Grooms, Cleary, Scott, Thomas and Ford
Document Path: l:\council\bills\gjk\21017htc06.doc
Companion/Similar bill(s): 1289

Introduced in the Senate on March 28, 2006
Currently residing in the Senate Committee on Judiciary

Summary: Local Option Property Tax Relief Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   3/28/2006  Senate  Introduced and read first time SJ-7
   3/28/2006  Senate  Referred to Committee on Judiciary SJ-7
   3/28/2006  Senate  Referred to Subcommittee: Martin (ch), Hutto, Ritchie, 
                        Sheheen, Campsen

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VERSIONS OF THIS BILL

3/28/2006

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

A BILL

ENACTING THE LOCAL OPTION PROPERTY TAX RELIEF ACT BY AMENDING THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLES 7 AND 9 IN CHAPTER 10 OF TITLE 4 SO AS TO AUTHORIZE THE IMPOSITION OF A SALES AND USE TAX IN A COUNTY UPON REFERENDUM APPROVAL IN ORDER TO USE THE REVENUE TO EXEMPT HOMESTEADS IN THE COUNTY FROM PROPERTY TAXES IMPOSED FOR SCHOOL OPERATIONS AND BY AUTHORIZING THE IMPOSITION OF CAPITAL PROJECTS FEES IN A COUNTY UPON REFERENDUM APPROVAL, SPECIFYING THE FEES TO BE IMPOSED, CREDITS ALLOWED AGAINST THESE FEES, AND THE USES OF THE REVENUES OF THESE FEES, INCLUDING A CREDIT AGAINST PROPERTY TAXES IMPOSED TO SERVICE BONDED INDEBTEDNESS.

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

PART I

Citation

SECTION    1.    This act maybe cited as the Local Option Property Tax Relief Act.

PART II

Local Sales and Use Tax

SECTION    1.    Chapter 10, Title 4 of the 1976 Code is amended by adding:

"Article 7

Local Option Sales and Use Tax

for Local Property Tax Exemption

Section 4-10-710.    This article provides the only method in which the governing body of a county by an ordinance imposing the tax authorized pursuant to this article thereby exempts homesteads from property taxes imposed in the county for school operations as provided in Section 3, Article X of the Constitution of this State.

Section 4-10-720.    As used in this article:

(1)    'County' has the meaning provided for in 'county area' as defined in Section 4-10-10(1);

(2)    'Homestead' means residential real property eligible for the four percent assessment ratio allowed pursuant to Section 12-43-220(c).

Section 4-10-730.    (A)    Subject to the requirements of this article, the governing body of the county by a county council ordinance or by an initiated ordinance submitted to the governing body of the county by a petition signed by qualified electors of the county, equal in number to at least fifteen percent of the qualified electors of the county, may impose a sales and use tax in increments of one-tenth of one percent, subject to referendum approval. The rate of the tax must be set at an amount expressed in tenths of one percent estimated to be sufficient to produce revenues that do not exceed those necessary to replace property tax revenue in the county for school operations on homesteads in the most recently completed fiscal year and must take into account payments to school districts pursuant to the exemption allowed pursuant to Sections 12-37-250 and 12-37-251. The governing body of the county shall obtain from the Board of Economic Advisors the board's certified estimate of the rate of sales and use tax necessary in the county to equal school operating property tax revenues derived from homesteads. This certified rate is the rate of tax that must appear in the referendum question.

(B)    If the sales and use tax authorized pursuant to this article is imposed in a county, then to the extent not already exempt, one hundred percent of the fair market value of a homestead in the county is exempt from all property taxes imposed for school operations.

Section 4-10-740.    (A)    Upon receipt of the ordinance, the county election commission shall conduct a referendum on the question of imposing the sales and use tax. A referendum for this purpose must be held at the time of the general election. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(B)    The referendum question to be on the ballot must read substantially as follows:

'Must a (rate) sales and use tax be imposed in (county) to replace property tax revenues not collected because of a one hundred percent property tax exemption for owner-occupied residential property from property taxes imposed for school operations?

Yes    []

No    []'

(C)    All qualified electors desiring to vote in favor of imposing the tax shall vote 'Yes' and all qualified electors opposed to imposing the tax shall vote 'No'. If a majority of the votes cast are in favor of imposing the tax, the tax is imposed as provided in this article, and beginning after the year in which the referendum is held, all homesteads otherwise taxable in the county are exempt from property taxes imposed in the county for school operations. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the results no later than December thirty-first to the county governing body and to the Department of Revenue.

(D)    Upon receipt of the returns of the referendum, the county council, by resolution, shall declare the results thereof. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

Section 4-10-750.    (A)    If the sales and use tax is approved in the referendum, the tax must be imposed by ordinance on the first of July following the date of the referendum. If the certification is not timely made to the Department of Revenue, the imposition and property tax exemption is postponed for twelve months.

(B)    If the sales and use tax is not approved in the referendum, the county governing body by ordinance, or fifteen percent of the qualified electors of the county, by an initiated ordinance submitted to the governing body of the county, may provide for a subsequent referendum held in the manner provided pursuant to Section 4-10-740, but such a referendum may be held only at the time of the general election.

Section 4-10-760.    (A)    Upon petition of at least fifteen percent of the qualified electors of a county presented to the county council of the county which has implemented the sales and use tax authorized by this article requesting that this tax be rescinded, the council shall direct the county election commission to conduct a referendum on the question of rescinding the sales and use tax. A referendum for this purpose must be held on the Tuesday following the first Monday in November following verification of the petition. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(B)    The referendum question to be on the ballot must read substantially as follows:

'Must the (rate) sales and use tax imposed in (county) be rescinded with the revenue not collected replaced by extending the property tax for school operations to owner-occupied residential property previously not subject to property tax in this county?

Yes    []

No    []'

(C)(1)    All qualified electors desiring to vote in favor of rescinding the tax shall vote 'Yes' and all qualified electors opposed to rescinding the tax shall vote 'No'. If a majority of the votes cast are in favor of rescinding the tax, the tax is rescinded effective July first following the referendum and property taxes for school operations apply to not otherwise exempt homesteads beginning after the year in which the referendum is held. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result no later than December thirty-first to the county council. If a majority 'Yes' vote is certified, it must be certified to the Department of Revenue by the same date.

(2)    Upon receipt of the return of the referendum, the county council shall declare the results thereof by resolution. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

(D)    A referendum for rescission of this tax may not be held earlier than two years after the tax has been imposed in the county. If a majority of the qualified electors voting in the rescission referendum vote against rescinding the tax, no further rescission referendums may be held for a period of two years. If a majority of the qualified electors vote in favor of rescinding the tax, the tax may not be reimposed in the county for a period of two years. The petition requesting rescission must be presented to the county governing body at least one hundred twenty days before the Tuesday following the first Monday of November of that year or the referendum must be held on the Tuesday following the first Monday of November of the following year.

Section 4-10-770.    (A)    The tax levied pursuant to this article must be administered and collected by the Department of Revenue in the same manner that other sales and use taxes are collected. The department may prescribe amounts that may be added to the sales price because of the tax.

(B)    The tax authorized by this article is in addition to all other local sales and use taxes and applies to the gross proceeds of sales in the applicable area that is subject to the tax imposed by Chapter 36 of Title 12 and the enforcement provisions of Chapter 54 of Title 12. The gross proceeds of the sale of items subject to a maximum tax in Chapter 36 of Title 12 are exempt from the tax imposed by this article. The tax imposed by this article also applies to tangible personal property subject to the use tax in Article 13, Chapter 36 of Title 12.

(C)    Taxpayers required to remit taxes under Article 13, Chapter 36 of Title 12 shall identify the county in which the personal property purchased at retail is stored, used, or consumed in this State.

(D)    Utilities shall report sales in the county in which the consumption of the tangible personal property occurs.

(E)    A taxpayer subject to the tax imposed by Section 12-36-920, who owns or manages rental units in more than one county, shall report separately in his sales tax return the total gross proceeds from business done in each county.

(F)    The gross proceeds of sales of tangible personal property delivered after the imposition date of the tax levied under this article in a county, either under the terms of a construction contract executed before the imposition date, or a written bid submitted before the imposition date, culminating in a construction contract entered into before or after the imposition date, are exempt from the sales and use tax provided for in this article if a verified copy of the contract is filed with the Department of Revenue within six months after the imposition date of the sales and use tax provided for in this article.

(G)    Notwithstanding the imposition date of the sales and use tax authorized pursuant to this chapter, with respect to services that are billed regularly on a monthly basis, the sales and use tax authorized pursuant to this article is imposed beginning on the first day of the billing period beginning on or after the imposition date.

Section 4-10-780.    (A)    The revenues of the tax collected under this article must be remitted to the Department of Revenue and placed on deposit with the State Treasurer and credited to a fund separate and distinct from the general fund of the State. After deducting the amount of any refunds made and costs to the Department of Revenue of administering the tax, not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues quarterly to the county treasurer of the county in which the tax is imposed. The State Treasurer may correct misallocations by adjusting subsequent distributions, but these adjustments must be made in the same fiscal year as the misallocations.

(B)    Revenues of the tax must be distributed by the county treasurer to the school districts in the county in the proportion that each school district received all property taxes imposed in the county for school operations for the fiscal year for which the sales and use tax rate was calculated by the Board of Economic Advisors. For counties in which there is more than one school district, if the school districts unanimously agree on a distribution plan, the revenues of the tax must be distributed pursuant to the terms of the unanimous agreement.

Section 4-10-790.    The Board of Economic Advisors shall furnish data to the State Treasurer and to the school districts receiving revenues for the purpose of calculating distributions and estimating revenues. The information that must be supplied to school districts upon request includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240.

Section 4-10-800.    A school district receiving revenues of the tax authorized pursuant to this may not impose an annual increase in property tax millage for school operations of more than the combined percentage increase in state personal income growth and school district population growth in the most recent year this data is available."

PART III

Local Option Capital Projects Fees

SECTION    1.    Chapter 10, Title 4 of the 1976 Code is amended by adding:

"Article 9

Local Option Fees - Bonded Indebtedness Credit

Section 4-10-910.    Subject to the referendum approval requirements provided pursuant to Section 4-10-920, the governing body of a county by ordinance shall implement the this article by establishing the funds, imposing the fees, and providing for the use of fund revenues in the manner provided pursuant to this article.

Section 4-10-920.    (A)    The governing body of the county by ordinance may provide for the implementation in the county of the provisions of this article. Upon receipt of the ordinance, the county election commission shall conduct a referendum at the time of the general election in an even-numbered year on the question of allowing the governing body of the county to implement the provisions of this article. The state election laws apply to the referendum mutatis mutandis. The county election commission shall publish the results of the referendum and certify them to the county council. The fees, funds, and uses thereof authorized by this article may not be imposed in the county area, unless a majority of the qualified electors voting in the referendum approve the question.

(B)    The ballot question must read substantially as follows:

'Do you favor imposing in _______ County a capital projects fee when ownership of residential property is transferred, when a building permit is obtained for new residential property, and when rollback tax is paid on real property changed from agricultural, and allow a credit against this fee when imposed on residential property transfers and residential construction building permits equal to a portion of real property taxes paid by the fee payer in this State in the preceding ten years, and providing that the revenues of these fees must be used to provide a credit against property taxes imposed to pay bonded indebtedness and for transportation infrastructure in the county?

Yes    []

No    []'

(C)    If the question is not approved at the referendum, the county council may call for another referendum on the question. However, a subsequent referendum for this purpose may be held only at the time of the general election in even-numbered years.

(D)    Two weeks before the referendum the county council shall publish in a newspaper of general circulation within the jurisdiction an explanation of the fees, the credits against the fees, and the method that the bonded indebtedness property tax credit will apply.

(E)    If a favorable vote is certified, the ordinance implementing the funds and fees may take effect no sooner than January first after certification. If a favorable vote is certified, any implementing ordinance must include both of the funds and all of the fees provided in this article and the revenues of these fees may be used only for the purposes provided in this article.

(F)    Upon petition of fifteen percent of the qualified electors of a county presented to the governing body of that county requesting the implementation of this article in the county, the county governing body shall cause to be conducted a referendum on the Tuesday following the first Monday in November next following on the question of implementation. State election law, applies to this referendum mutatis mutandis. The question on the ballot must be as provided in subsection (B) of this section. If a favorable vote is certified, the implementation ordinance must include both of the funds and all of the fees provided in this article and the revenues of the fees may be used only for the purposes provided in this article. The implementation ordinance may take effect no sooner than January first after certification. If an unfavorable vote is certified, no further implementation referendum, however commenced, may be held for at least two years. The petition requesting implementation must be presented to the county governing body at least one hundred eighty days before the Tuesday after the first Monday of November of that year or the referendum must be held on the Thursday following the first Monday of November of the following year. The provisions of subsection (D) of this section apply with respect to a referendum conducted pursuant to this subsection.

Section 4-10-930.    (A)    The governing body of the county by ordinance may rescind the fees allowed pursuant to this article, but this rescission must apply to all fees imposed pursuant to this article.

(B)    Upon petition of fifteen percent of the qualified electors of a county presented to the governing body of that county which has implemented the funds and fees allowed pursuant to this article, requesting that this implementation be rescinded, the county governing body shall cause to be conducted a referendum on the Tuesday following the first Monday in November next following on the question of rescinding implementation. The state election laws apply to the referendum mutatis mutandis. The county election commission shall publish the results of the referendum and certify them to the county council. The implementation of the provisions of this article must be rescinded in the county area upon the certification of the results if a majority of the qualified electors voting in the referendum vote in favor of rescinding implementation.

(C)    The ballot question must read substantially as follows:

'Do you favor rescinding in ________ County the implementation of capital projects fees and the elimination of the bonded indebtedness property tax credits allowed using the revenue of these fees?

Yes    []

No    []'

(D)    A referendum for rescission of this tax may not be held earlier than two years after the implementation in the county. If a majority of the qualified electors voting in the rescission referendum vote against rescinding implementation, no further rescission referendums may be held for a period of two years. If a majority of the qualified electors vote in favor of rescinding implementation, implementation may not be reimposed in the county for a period of two years. The petition requesting rescission must be presented to the county governing body at least one hundred twenty days before the Tuesday following the first Monday of November of that year or the referendum must be held on the Tuesday following the first Monday of November of the following year. If a favorable vote is certified, the implementation ceases after December thirty-first following certification.

Section 4-10-940.    (A)    The governing body of the county by ordinance shall establish in the county treasury a separate trust fund styled the 'Capital Projects Property Tax Credit Trust Fund' to which must be credited those fee revenues as authorized pursuant to this article. Interest earned on this fund must be credited to it and used as other revenues of the fund are used. All of the revenues of this fund for a fiscal year must be used to provide a tax credit against the property tax imposed by the county and all other property-taxing entities in the county for the payment of bonded indebtedness. The credit applies pro rata and the credit is allowed only for property taxes due and payable after the end of the fiscal year in which the fund revenues accumulated.

(B)    The governing body of the county by ordinance shall establish in the county treasury a separate trust fund styled the 'Transportation Infrastructure Trust Fund', to which must be credited those fee revenues authorized pursuant to this article. Interest earned on this fund must be credited to it and distributed and used as other revenues credited to the fund are used. The revenues of this fund must be credited to the county in the proportion that the population of the unincorporated area of the county is of the total population of the county and to municipalities in the county in the proportion that the population of the municipality is of the total population of the county. Counties and municipalities must use these revenues for transportation infrastructure needs but to the extent not so used, these revenues must be used to provide an additional tax credit against the property tax imposed by the county or municipality for the payment of bonded indebtedness. The credit applies pro rata and the credit is allowed only for property taxes due and payable after the end of the fiscal year in which the fund revenues accumulated.

(C)(1)    For purposes of this subsection:

(a)    'Closing agent' means the attorney or any third party, however qualified, representing the transferee at a real estate closing. When there is no separate closing agent, the transferee is deemed the closing agent.

(b)    'Residential real property' means real property improved by residential structures including, but not limited to, single family and multifamily houses, condominium units, apartments, and units of manufactured housing taxed as real property, whether or not occupied, and regardless of ownership. Incidental residential accommodations on otherwise nonresidential real property do not constitute residential real property.

(2)    The governing body of the county by ordinance shall impose on the transferee a capital projects fee when ownership of residential real property is transferred by deed the recording of which is subject to the deed recording fee imposed pursuant to Chapter 24 of Title 12. This capital projects fee must be set by ordinance as a percentage of the consideration for the transaction referred to as the transaction amount, but not more than three-fourths of one percent of that amount. The transaction amount is the amount required to be used in calculating the deed recording fee as determined pursuant to Section 12-24-30. The fee must be collected by the closing agent at the time of the closing and remitted to the county treasurer on a schedule determined by the county treasurer. The county treasurer may delegate the collection of the fee to the officer authorized by law to record deeds in the county. If the residential real property when acquired and occupied by the transferee will qualify for the property tax classification allowed pursuant to Section 12-43-220(c), there is allowed as a credit against the fee otherwise due ad valorem taxes paid by the transferee in the preceding ten years on real property in this State classified for property tax purposes pursuant to Section 12-43-220(c) at the rate of one dollar of credit for each four dollars of property tax paid. A credit is not allowed unless the transferee makes an affidavit, under penalty of perjury, that the property tax paid and used as a credit against the fee has not been used to claim a credit against the fee imposed pursuant to this subsection in another transfer or a fee imposed pursuant to subsection (D) of this section. The fee, less any applicable credit, must be calculated by and collected by the closing agent at the closing. The treasurer shall furnish the closing agent the documentation necessary pursuant to item (4) of this subsection for recording the deed. In a county where collection of the fee has been delegated to the deed recording officer, the fee must be paid at the time the deed is filed for recording. If within twelve months of the date the deed is recorded, real property on which the fee has been paid is no longer residential real property, the transferee may apply for and the county treasurer shall refund the fee, together with interest at the rate provided pursuant to Section 12-54-25.

(3)    Of the fee revenues received pursuant to this subsection, the county treasurer shall credit:

(a)    seventy-five percent to the Bonded Indebtedness Property Tax Relief Fund established pursuant to subsection (A) of this section; and

(b)    twenty-five percent to the Transportation Infrastructure Trust Fund established pursuant to subsection (B) of this section.

(4)(a)    Before a deed subject to the recording fee imposed pursuant to Chapter 24 of Title 12 may be recorded, there must be submitted to the recording officer:

(i)        the certificate of the county treasurer that the capital projects fee imposed pursuant to subsection (C) of this section has been paid or that a fee is not due by virtue of the credits allowed against the fee; or

(ii)    an affidavit made under penalty of perjury by the transferee on the deed to be recorded that the capital projects fee imposed pursuant to subsection (C) of this section does not apply to the transfer made by the deed.

(b)    In a county in which the county treasurer has delegated to the recording officer the authority to collect the fees imposed pursuant to subsection (C) of this section, the recording officer may proceed to record the deed as provided by law upon payment of any fee due or receipt of the affidavit required pursuant to subsubitem (ii) of this item.

(D)(1)    The governing body of the county by ordinance shall provide that there must be paid a capital projects fee before a building permit may be issued for construction of a new residential structure as described in subsection (C)(1) of this section. This capital projects fee must be set by ordinance as a percentage of the value of the improvement as measured by the value stated in the application for the building permit, but not more than three-fourths of one percent of such value. This fee applies to all building permits issued in a county, including such permits issued by a municipality. The permitting officer shall collect the fee at the time the permit is issued and remit the fee to the county treasurer on a schedule determined by the treasurer. In the case of a permit for the construction of residential real property that when occupied by the permit holder will qualify for the property tax classification allowed pursuant to Section 12-43-220(c), there is allowed as a credit against the fee otherwise due ad valorem taxes on real property paid by the property owner for the permit in the preceding ten years on real property located in this State classified for property tax purposes pursuant to Section 12-43-220(c) at the rate of one dollar of credit for each four dollars of property tax paid. A credit is not allowed unless the property owner makes an affidavit, under penalty of perjury, that the property tax paid and used as a credit against a fee imposed pursuant to this subsection has not been used to claim a credit against another fee imposed pursuant to this subsection or subsection (C) of this section.

(2)    Of the fee revenues received pursuant to this subsection, the county treasurer shall credit:

(a)    seventy-five percent to the Bonded Indebtedness Property Tax Relief Fund established pursuant to subsection (A) of this section; and

(b)    twenty-five percent to the Transportation Infrastructure Trust Fund established pursuant to subsection (B) of this section.

(E)(1)    The governing body of the county by ordinance shall impose a capital projects fee equal to the amount of the rollback tax imposed pursuant to Section 12-43-220(d)(4) when agricultural real property is applied to some other use. This fee must be billed on the property tax notice billing the rollback tax and for all purposes of collection and enforcement, this fee is deemed rollback tax.

(2)    Of the fee revenue received pursuant to this subsection, an amount equal to:

(a)    seventy-five percent must be credited to the Bonded Indebtedness Property Tax Relief Fund established pursuant to subsection (A) of this section; and

(b)    twenty-five percent must be credited to the Transportation Infrastructure Trust Fund established pursuant to subsection (B) of this section."

PART IV

Severability

SECTION    1.    If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

PART V

Effective Dates

SECTION    1.    This act takes effect upon approval of the governor except that Part I of this act takes effect upon ratification of an amendment to Article X, Section 3 of the Constitution of this State proposed at the time of the general election of 2006, allowing the exemption provided in Article 7, Chapter 10, Title 4 of the 1976 Code, as added in Part I of this act.

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