Indicates Matter Stricken

Indicates New Matter

 

Committee Report

April 28, 2026

 

S. 439

 

Introduced by Senators Peeler, Turner, Davis, Bennett, Verdin, Alexander, Grooms, Kimbrell, Johnson, Jackson, Sutton, Cromer, Climer, Adams, Zell and Young

 

S. Printed 4/28/26--H.

Read the first time May 6, 2025

 

________

 

The committee on House Ways and Means

To whom was referred a Bill (S. 439) to amend the South Carolina Code of Laws by amending Section 12-37-220, relating to property tax exemptions, so as to increase the maximum reimbursement amount for, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass:

 

B.W. BANNISTER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill increases the reimbursement cap for the manufacturing property tax exemption, pursuant to §12-34-220(B)(52), from $170,000,000 to $300,000,000. This section exempts 42.8571 percent of the value of manufacturing property from property taxes and is reimbursed by the State to local governments from the Trust Fund for Tax Relief.

DOR anticipates being able to administer this change within the normal course of agency business. Therefore, this bill will have no expenditure impact for implementation.

 

State Revenue

This bill increases the reimbursement cap for the manufacturing property tax exemption, pursuant to §12-34-220(B)(52), from $170,000,000 to $300,000,000, which will potentially change the mechanism for funding the amount of the reimbursement above $170,000,000.

Based on the current BEA projection, the manufacturing property tax exemption reimbursement will exceed the current limit of $170,000,0000 by $10,431,611 in FY 2026-27 as shown below.

Projected Manufacturing Property Tax Exemption Reimbursement

 

Pursuant to §11-11-150, the BEA deducted $170,000,000 from the state income tax revenue to pay the reimbursements for the manufacturing property tax exemption from the Trust Fund for Tax Relief up to the current statutory cap. However, Proviso 117.202 of the FY 2025-26 Appropriations Act allows up to $300,000,000 to be used for the reimbursements despite the cap and specifies that the balance in the Trust Fund for Tax Relief may be used to fund the excess amount. Without this bill, the additional $10,431,611 would be funded from the Trust Fund balance in FY 2026-27 if Proviso 117.202 remains in effect. By increasing the statutory cap from $170,000,000 to $300,000,000, this bill will require the BEA to increase the amount deducted from state income tax revenues and credited to the Trust Fund for Tax Relief by $10,431,611 in FY 2026-27. In order to continue to fund the increase in the reimbursements using the balance in the Trust Fund, additional legislative direction would be necessary. For information, the current projected FY 2025-26 year-end balance for the Trust Fund for Tax Relief that would be available to fund the $10,431,611 in reimbursements is $114,658,825.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 12-37-220, RELATING TO PROPERTY TAX EXEMPTIONs, SO AS TO INCREASE THE MAXIMUM REIMBURSEMENT AMOUNT for the exemption ON CERTAIN MANUFACTURING PROPERTY.

 

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

 

SECTION 1.  Section 12-37-220(B)(52) of the S.C. Code is amended to read:

 

        (a)(i) 42.8571 percent of the property tax value of manufacturing property assessed for property tax purposes pursuant to Section 12-43-220(a)(1). The exemption allowed by this item does not apply to property owned or leased by a public utility, as defined in Section 58-3-5, that is regulated by the Public Service Commission, regardless of whether the property is used for manufacturing. For purposes of this item, if the exemption is applied to real property, then it must be applied to the property tax value as it may be adjusted downward to reflect the limit imposed pursuant to Section 6, Article X of the South Carolina Constitution, 1895;

               (ii) To the extent any such monies are refunded or otherwise credited under this item to a public utility that is regulated by the Public Service Commission, regardless of whether the property is used for manufacturing, any such refund or credits must be flowed through to customers as a reduction in rates, as appropriate.

           (b) The revenue loss resulting from the exemption allowed by this item must be reimbursed and allocated to the political subdivisions of this State, including school districts, in the same manner as the Trust Fund for Tax Relief, not to exceed one three hundred seventy million dollars per year. In calculating estimated state individual and corporate income tax revenues for a fiscal year, the Board of Economic Advisors shall deduct amounts sufficient to account for the reimbursement required by this item.

           (c) Notwithstanding the exemption allowed by this item, in any year in which reimbursements are projected by the Revenue and Fiscal Affairs Office to exceed the reimbursement cap in subitem (b), the exemption amount shall be proportionally reduced so as not to exceed the reimbursement cap.

           (d) Notwithstanding any other provision of law, property exempted from property taxes in the manner provided in this item is considered taxable property for purposes of bonded indebtedness pursuant to Section 15, Article X of the Constitution of this State.

 

SECTION 2.  This act takes effect upon approval by the Governor and first applies to property tax years beginning after 2024.

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