Property Taxes, School Funding, and Property Tax Relief in South Carolina

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1 Property Taxes, School Funding, and Property Tax Relief in South Carolina Holley H. Ulbrich Introduction The South Carolina property tax, which is now subject to a flurry of proposed major changes, dates back to colonial times. Until 1926 it was shared by state and local governments. Today it is a significant revenue source for three kinds of local governments (municipalities, counties and school districts) as well as special purpose districts and special tax districts. Property taxes provide 34% of all school funding, excluding proceeds of bond issues. For counties, property taxes account for 43% of all revenue, while cities, which have more diversified revenue sources, rely on property taxes for 21% of revenue. 1 Property taxes raise over $3 billion a year in South Carolina, about two-thirds of which is used to fund public K-12 education. Why Tax Property? Except for certain excise taxes, the distribution of the tax burden is usually based on either ability to pay or assessing beneficiaries of certain kinds of services that the taxes are used to finance. There are three broad measures of ability to pay: income, wealth, and consumption, resulting in the three major taxes, income taxes on income, property taxes on wealth, and sales taxes on consumption. However, none of the three major broad-based taxes are levied on an allinclusive base. Many kinds of income are excluded from the income tax base. Sales taxes only tax certain kinds of consumption, often omitting food, most services and housing. Property taxes, likewise, are levied on only a few forms of property. Like most other states, South Carolina does not tax such forms of wealth as stocks, bonds, works of art, or home furnishings (except for rental property). Instead, the property tax is imposed primarily on land and improvements and selected kinds of personal property. To levy a benefit tax, it must be possible to identify users of particular public services, so that those who do not use the service do not pay or pay less. Gasoline taxes for highway improvements are the classic example. Many local government services are either services to real property (solid waste collection, street lights, police and fire protection) or enhance property values (good schools). Thus, there is a benefit element in the property tax that supports making the tax burden proportional to the value of property. Both the sales and income taxes are based exclusively on ability to pay. Property taxes, however, have a dual rationale, both ability to pay and benefit. Ownership of real property offers a measure of ability to pay, however imperfect. But the property tax also has a benefit component, since services funded by property revenues not only are consumed by property owners but also enhance property values. Even taxes on personal property, particularly motor vehicles, partake of both rationales. More affluent families tend to own more cars and more expensive cars, an indicator of ability to pay. Cars impose significant costs and service demands on counties and municipalities for road maintenance, parking, traffic control, and emergency services of various kinds. 1

2 Property Tax Revolts, Ability to Pay, and the Benefit Principle Both rationales for the property tax, especially for owner-occupied residential property, have been under attack. The current housing boom as well as the gradual shift of wealth holdings at higher income levels to other, non-taxed assets have made market value for homes an increasingly imperfect measure of ability to pay. Unlike many other assets, owner-occupied housing does not generate a cash flow with which to pay taxes, and an increase in taxable value is often not associated with an increase in income from which to pay higher taxes. Income and/or sales taxes are both levied on an explicit cash flow, but property taxes are not. Furthermore, any appreciation in property value reflected in rising assessments may or may not be accompanied by a comparable rise in the income with which to pay the tax bill. Supposedly the mill rate 2 should fall to compensate for some of this excessive growth of the property tax base, but it is all too easy for local governments to find uses for the revenue windfall and loopholes in South Carolina s mill rate rollback requirement. A real estate boom heavily concentrated in owner-occupied housing has also resulted in shifting some of the tax burden toward housing rather than commercial, industrial and personal property, even though homeowners are most likely to have a cash flow problem as well as a gap between rising property values and more slowly rising personal incomes. However, owner-occupied housing does generate a flow of services that is not subject to income tax. The state partly acknowledged this issue in the 1932 constitutional change that removed financial assets from the property tax base. The justification for the change was that income from such assets was subject to state income tax, whereas implicit rental income from owner-occupied property was not. 3 However, this rationale does not explain why property taxes continued to be levied on rental, commercial and industrial property, which also generates income flows subject to income tax. Ironically, today the pressure for relief is from taxes on owner-occupied property and personal vehicles, the two forms of wealth that do not generate a taxable cash flow. The benefit rationale for property taxation nationally has weakened by funding changes that sever or attenuate the link between school quality and property taxes. In South Carolina, between 60% and 70% of the local property tax bill is for public schools. With some proposed forms of relief, the state share would be much larger, school funding would be much more uniform, and higher local taxes would not necessarily buy better schools. School Funding, Property Taxes, and the Courts Beginning in 1994, South Carolina experienced the same linked pressures for property tax relief and school funding reform as other states, arising from court cases on school funding that led to legislative actions and citizen initiatives from California eastward. Abbeville County School District et al. v. the State of South Carolina et al., filed by 34 of South Carolina s school districts, challenged the equity and adequacy of state funding for public education. Decisions in other states challenged the common practice of funding schools based primarily on local taxable wealth, which resulted in very different spending per pupil in different school districts. Districts 2

3 with high per pupil wealth could provide a quality education with relatively low tax rates, while districts with low per pupil wealth provided a much less satisfactory education even while levying higher tax rates. The most famous of court case was Serrano (California), which held that the quality of a child s education should not depend on the taxable wealth of the district in which the child resides. According to the court in Serrano and other cases, a state has a responsibility to ensure equal educational opportunity for all its children. Legislatures responded to these court decisions by shifting more of the cost of funding education to the state, reducing differences in spending between districts and breaking the link between the value of a home and the quality of the schools that were supported by taxes on that home. In 1970, States were providing an average of 39% of K-12 public education funding, while local government provided 53% and the federal government supplied the remaining 8%. By 2004, the picture had changed dramatically: federal aid had changed very little, to 9%, but states were paying an average of 47% and local government 44%. There is still a wide range in the federal/state/local division, particularly state and local. In Hawaii the state pays 87% and local governments only 2.4%, while Nebraska provides only 33% state funding and local sources 58%. In South Carolina, the shares were 10.4% federal, 46% state, and 43.6% local in 2004, close to the national average. 4 States increased their funding share by various means, most often by increasing state sales taxes. In most of these states, property tax relief took the form of reducing demands on the property tax to fund directly education. In a few states, including South Carolina, there was no significant increase in direct state funding of education. Instead, the state funded increased property tax relief to homeowners to reduce their property tax burdens while leaving property tax revenue to school districts largely unchanged. Property Tax Relief in South Carolina Prior to 2005 Many states offer state-funded property tax relief. Generally relief is targeted to particular groups or classes of property. In three-quarters of the states that offer such relief, an income ceiling is part of the relief program. 5 Targeted relief, which is less expensive than relief to broad categories of taxpayers, can be used to customize the distributional impact of the property tax. If newly created relief is means-tested, it should make the overall revenue system less regressive. If relief is granted by non-income-related criteria (homeowners, elderly, etc.) the distributional impact is less clear. If relief takes the form of limits on increases in the taxable value of property, the effect would be to make the revenue system more regressive. Property tax relief in South Carolina takes place in the context of a classified assessment system. Act 208 in the 1970s set assessment rates ranging from 4% for owner-occupied and agricultural real property to 10.5% for industrial and personal property, including motor vehicles. Special treatment is given to farm and forest property and golf courses, which are assessed at use value rather than market value. Act 208 lasted about 20 years before being challenged, first by property tax relief for homeowners from school taxes and then by a constitutional change reducing the assessment rate for motor vehicles from 10.5% to 6%. Fee in lieu agreements for industrial location came into use in the 1990s, reducing the effective rate on most new industry to either 6% or 4%. As older industrial property depreciates, so that the assessment rate is less significant, 3

4 business personal property and utility property will be the only remaining properties in the higher classes of 10.5% and 9.5%. South Carolina is moving de facto if not de jure to a two-rate assessment system, 4% and 6%. South Carolina gives targeted relief to homeowners (with additional relief to elderly and disabled homeowners), owners of farm and forest property, and firms being recruited for relocation or expansion. Unlike some states, South Carolina does not use income as a factor in eligibility for property tax relief, although several proposals in the 2006 session of the General Assembly did include such provisions. The first form of state-funded property tax relief in South Carolina was the homestead exemption for the elderly, which funds relief from all local property taxes on the first $50,000 of market value of owner-occupied residential property for those over age Other states provide similar relief to other categories of homeowners, such as disabled, blind, or veterans. Some states also extend property tax relief to renters through mechanisms such as circuit breakers. 7 Property tax relief for homeowners for school taxes on the first $100,000 of market value was instituted in 1994 in response to two concerns. The first was anticipating an unfavorable outcome of the lawsuit filed in As of this writing, the suit is still in process after multiple appeals, but thus far the issue appears to have been narrowed to one of adequacy, not equity. If the state was to assume greater funding for (equalized) education and break the link between school quality and home values, then South Carolina would follow other states in an intensified property tax revolt. The second reason for this relief was the spread of a national property tax relief movement to South Carolina because of the rapid appreciation of home values in certain areas. In South Carolina, reassessments in Lexington and Charleston counties reflected rapidly appreciating values and led to pressure on the General Assembly for property tax relief for homeowners. While the state requires a mill rate rollback in the reassessment year to prevent a windfall increase in local government revenue, the law contains many loopholes. Even if the rollback were to be strictly observed, there would still be taxpayers with significant increases in property tax bills as the burden shifted from slowly appreciating to rapidly appreciating property. Relief to homeowners approved in 1994 and implemented the following year was calculated on the basis of 1995 mill rates. Initially the cost of this relief was $195 million, but by FY 2002 it had risen to $249 million, at which level it was capped. Homeowners were not the only group to experience property tax relief. The state also authorizes counties to negotiate favorable tax agreements with business firms as an inducement to locate here. Counties may negotiate fee in lieu agreements that set the firm s property tax obligation at the equivalent of the current mill rate applied to a 4% or 6% (rather than 10.5%) assessment and freeze that mill rate for periods up to 30 years. The state does not fund any of this relief. Most other Southern states offer similar property location incentives. The rationale is that there will be at least some fiscal gain over time (revenue over costs of services provided) and there will in most cases be substantial private economic gain in terms of jobs and income, including state income and sales tax revenue. A final act of property tax relief was to owners of personal vehicles with a reduced assessment rate. This relief was approved as a constitutional amendment by voters in 2000, and the phased 4

5 reduction of the assessment rate from 10.5% to 6% was completed in The state did not fund any of this relief. Personal vehicles constituted approximately 20% of the property tax base in 2000, so the reduction in assessment was equivalent to an 8.3% reduction in the property tax base. The Current Property Tax Relief Movement Homeowners continue to be the major focus of concern in the recent and continuing spate of legislative proposals for further property tax relief in South Carolina. In the late summer of 2005, the Senate Finance and Judiciary Committees held a series of hearings around the state at which individuals were invited to give three minutes of testimony, supplemented by any written testimony they chose to offer. These hearings focused on two main proposals, a cap on the increase in assessed value and an increase in the sales tax rate to fund additional property tax relief. While most speakers were demanding relief for homeowners, minority voices at the hearings reminded legislators of inequitable treatment of renters or advocated targeted property tax relief based on income (circuit breakers). By the time the eight hearings were completed, legislators perceived a mandate for significant and substantial property tax relief, especially for homeowners. As a result, some 135 property tax bills were introduced in the 2006 session of the General Assembly, many offering assessment caps and/or a sales for property tax swap. Both houses acted on some version of a modified acquisition value system of assessment combined with caps on increases in assessed value at the regular five year reassessment. Swap bills proposed to increase the state sales tax rate from five percent to six, seven or eight percent and eliminate some sales tax exemptions, although often adding a food exemption. Some offered relief only to homeowners. Others expanded relief to additional groups of taxpayers personal vehicles, renters, the elderly (by indexing the homestead exemption), or all taxpayers. A few proposals originating in the Senate provided targeted relief based on income. Some proposals concentrated on school tax relief, others on all local property taxes. One bill provided relief from all school taxes for all classes of property by having the state fully fund education, which would have addressed the issues raised in the school lawsuit as well as the clamor for property tax relief. One difficult issue to resolve in any sales-for-property-tax swap is the distribution of relief. If relief is distributed to homeowners based on the property s market value (which already enjoys relief from taxes on the first $100,000), then a regressive sales tax falling heavily on low-income South Carolinians would be funding additional property tax relief for those owning homes valued over $100,000 a transfer from the poor to the rich. If the relief is distributed on a per pupil basis or some other equalizing formula, there would be politically unacceptable gains to low-wealth school districts at the expense of high-wealth districts. Other Voices As legislators digested the hearings, other voices started to weigh in. Realtors had in general supported assessment caps and property tax relief, but the state Chamber of Commerce and a number of local chambers voiced caution. In South Carolina, about 43% of sales tax revenue is derived from business purchases. Most of the bills offered no property tax relief to business 5

6 firms. A study by Gallo and Associates for the South Carolina Chamber of Commerce estimated that there would be an increase in the tax burden on business from a sales-property tax swap of $490 million. 8 School districts feared losing what little fiscal autonomy they enjoyed, becoming even more dependent on state aid. Cities and counties sat cautiously on the sidelines, hoping that city and county property taxes would not be included. Public interest groups such as Fair Share, the League of Women Voters, and the Progressive Network expressed concerns about the shifting distribution of the tax burden and protecting state revenues in the light of budget projections that showed shortfalls in the coming years. 9 Acquisition Value and Assessment Caps: The Issues While Proposition 13 in California is best known for putting a ceiling on property tax growth, another relevant feature was a shift to acquisition value as the basis for taxing owner-occupied houses. Homes were valued at the time of sale or transfer. If they were not subsequently sold or transferred, the value was incremented by 2% a year. No other state has copied acquisition value in its precise form, because it can create enormous inequities between owners of similar properties. It puts a premium on stability and a penalty on mobility. However, a number of states have adopted or at least considered imposing caps on property assessments that limit the amount the taxable value of a property can increase at reassessment. From an equity perspective, acquisition value means that very similar properties with very similar public service demands will pay very different tax bills based solely on how recently the property has been sold. In fact, some economists think that acquisition value will reduce mobility and turnover of housing. The evidence from California is that acquisition value mainly benefits the two groups least able to move, the poor and the elderly. 10 A second consequence is that local governments would see little growth in the revenue stream. The cost of government goes up every year at least as much as population and inflation. Normally so does the tax base which keeps pace with new construction and increases in property values. With acquisition value, growth in the tax base depends solely on new construction, improvements, and turnovers, which will be disadvantageous to small, poor rural counties where there is very little real estate market activity. Slowly growing counties and school districts growing would be under the greatest pressure to raise mill rates, further handicapping their attempts to attract industrial, commercial and residential development. In South Carolina, many schools are already subject to limits on their ability to raise mill rates, so these districts will not see much growth in revenue to accommodate rising education costs. A less drastic alternative to acquisition value is caps on assessment growth. South Carolina authorized counties to impose a cap of 15% on assessed value at the scheduled five year reassessment. This legislation was challenged in court on the grounds that it is inconsistent with constitutional assessment rates. Currently, both houses have passed and are likely to send forward to voters a constitutional amendment to permit caps. The proposed constitutional amendment allows counties to remain with the present system or opt for a modified acquisition value system with a cap on assessment growth of 15% every five years. A number of states have adopted or at least considered a variety of kinds of limits on property tax revenue growth either through assessments, or through mill rates, or by other methods (Table 1). 6

7 Table 1 Representative Limits on Assessment/Tax Increase 2004 State Applies to Form of limit Arizona All property Limit of 10% assessment increase a year (with related provisions) Florida Homestead only 3% or the rate of inflation, whichever is less California All property Acquisition value assessment 1% ceiling on tax on any parcel increase no more than 2% a year Iowa All property 4% statewide cap on annual growth of assessed value Massachusetts All property 2.5% ceiling on total property tax collections (2.5% of full value of taxable property) and property tax growth (increase in mill rate) Michigan All property Assessed value increase limited to 5% per year or rate of inflation Texas All property Limit of 10% on annual increase in assessment Washington All property Limit of 15% a year in assessment growth Sources: National Conference of State Legislatures. (2004, August). A guide to property taxes: the role of property taxes in state and local finances. Washington, DC: Author. Sjoquist, D. and Pandey, L. (1999, November). Limitations on increases in property tax assessment. Atlanta, GA: Andrew Young School of Policy Studies. Sjoquist and Pandey attempt to measure several economic effects of assessment increase limits: the effect on the level of property taxes, the distribution of the property tax burden, and assessment disparities. Reviewing a number of studies, they find that caps do limit the growth of property tax revenue, at least for municipalities. Studies from California indicate a shift in the tax burden toward occupants of multi-family housing and lower income residents. California also showed widening disparities between market value and assessed value because of the acquisition value system. 11 Caps on assessment growth assure that rapidly appreciating property does not assume an increasing share of the cost of funding local public services. The argument for caps is that the housing boom has escalated housing prices or values at a faster rate than the growth of personal 7

8 income, so many homeowners are seeing their taxes grow faster than their incomes. While it is possible to offer targeted relief to homeowners for whom there is such a hardship, the preferred method in many states is to cap growth of property values rather than to offer relief based on taxes in relation to income. The argument against caps is that the increasing cost of public services is then shifted to more slowly appreciating property, including residential property most often occupied by lower income households. In South Carolina, the property tax burden is distributed roughly in proportion to income. 12 Caps would shift that distribution of the tax burden in a more regressive direction. Because assessment caps would slow the growth of local government revenue, there would be more frequent increases in the mill rate, which would be the vehicle for shifting the tax burden from rapidly appreciating property to more slowly appreciating property. But there are constraints on the mill rate weak constraints for cities and counties, variable constraints on school districts, depending on the degree of fiscal autonomy that the district enjoys. 13 So caps would have the effect of slowing the increase in local government revenue. According to some proponents of caps, that would be a good outcome. They point to the growth of property tax revenue in recent years as an indicator of excessive growth of local government. Table 2 summarizes the growth rates for property tax collections, property tax base, and the average mill rate for South Carolina school districts, counties and municipalities between 1997 and The slower growth in county and municipal property tax collections in comparison to school district collections is partly the result of expanded use of local option sales taxes, at least 71% of which is mandated for property tax relief. Mill rates have grown very little. Most of the growth in property tax revenue for all types of local governments resulted from growth of the property tax base. Table 2 Growth Rates for Property Tax in South Carolina, Property tax collections Average annual growth rate Total 7.1% School districts 8.5% Counties 5.2% Municipalities 5.2% Property tax base total 5.8% Mill rate Total 1.5% School districts 1.7% Counties -1.0% Municipalities (including special districts) 3.1%. Source: S.C. Budget and Control Board, Office of Research and Analysis. (2003). Local government report. Columbia: SC, Author. 8

9 Swapping Sales for Property Tax: The Issues Michigan probably is the most famous for swapping sales taxes for school property taxes. In 1993, before the swap, Michigan s sales tax rate (4%) was one of the lowest in the nation, and Michigan s school property taxes as a percent of income were among the highest. The increase in the sales tax to 6% and the reduction in school property taxes moved Michigan in the direction of fiscal balance, closer to the rest of the nation. But the idea spread throughout the 1990s and into the new century in other states some, like Michigan, with high school property tax burdens, and others with less extreme situations. 14 South Carolina has become the most recent state to be attracted to the idea, even though homeowners already get substantial relief on school property taxes. The essence of the proposed swap is to raise the state retail sales tax rate from 5% to 7% and to eliminate some exemptions. There are five important issues to be considered in such a swap. The first is the changing distribution of the combined sales-property tax burden. The second is the distribution of the relief in relation to education funding. The third is the role of the property tax through capitalization into home values in linking good schools to willingness to pay property taxes. The fourth is the competitive effect on industry in general and retailers in particular. And the fifth is the reliability of the sales tax itself as a revenue source. Issue #1: Equity The sales tax is regressive. It can be made less regressive by exempting food and expanding coverage of services, but it will remain regressive. 15 The distribution of the property tax burden is less clear, but at least some observers find it to be closer to proportional than the sales tax. 16 For South Carolina, the distribution of the property tax burden appears to be less regressive than the sales tax. If relief is distributed primarily or exclusively to homeowners for school property taxes, the result will be doubly regressive. Low-income homeowners already have most or all of their school taxes covered by the existing relief on the first $100,000 of market value, so most of the additional benefit would go to higher income taxpayers, while the burden of the sales tax would fall heavily on low-income households. Most proposals give no relief to renters, who are disproportionately low-income. Business would also absorb a large share of the increased sales tax without getting property tax relief. The issue of distributing the costs and benefits of a tax swap among households has been the major obstacle to enacting any definitive legislation. The cost of completely eliminating school taxes is beyond the capacity of the sales tax to fund at an acceptable tax rate. Issue #2: Education Funding A second challenge to legislators was the issue of how to distribute the increased sales tax revenue among taxpayers (most likely homeowners) and school districts. A few proposals concentrate on using the funds to increase the state share of education funding as a less direct way to provide property tax relief, but legislators are concerned that school districts would not respond to increased state aid by reducing local school mill rates. Most proposals distribute the benefits directly to homeowners, not to school districts, resulting in the regressive distributional 9

10 impact just described. A lack of clarity about whether the purpose of this proposal is about property tax relief or about education funding has been an obstacle in devising an acceptable plan. Issue #3: The Homevoter Hypothesis According to economist William Fischel, there is a significant risk to education in shifting from local property tax funding to state funding for education. 17 Both property taxes and the quality of local public schools are capitalized into property values. Even homeowners without children in school take school quality into consideration in choosing a location because school quality affects the resale value of their homes, and support education funding as a way of protecting their largest single investment. If the link between property taxes and school quality in a particular district is broken by shifting to state funding, experience in California and elsewhere strongly suggests a decline in public support for education funding. Issue #4: Competitiveness As indicated earlier, business firms would shoulder an additional burden of $490 million in sales tax on their purchases with no property tax relief. Of particular concern are in-state retail merchants, who already are challenged by competition from internet, catalog, and cross-border shopping. Increasing the sales tax rate from 5% to 7%--8% in the 29 counties with a local option sales tax, sometimes 9% if there is a local capital projects tax would make that competition even more difficult. Issue #5: Adequacy Finally, there is an element of risk in relying more heavily on sales tax to fund K-12 education. General budget forecasts for most states, including South Carolina, are not optimistic for the next few years. 18 The sales tax is highly cyclical and lags behind growth of personal income. Raising the sales tax rate will result in some loss of sales to out-of-state, internet and catalog competitors as well as increased tax evasion. For all these reasons, revenue forecasters have reservations about whether the sales tax can sustain the revenue commitment to property tax relief envisioned in most swap proposals. Conclusion The story of property tax relief and the role of the property tax in funding public education in South Carolina are not over, and may not reach a definitive conclusion for some time. The General Assembly has wrestled with the issue for more than a decade, more intensely through the 2005 and 2006 legislative sessions, without coming up with a satisfactory alternative that is equitable and promises to generate adequate funding for education and other public purposes. The complex questions of the appropriate division of responsibility for education funding, the relative shares of major revenue sources, and the challenge of preserving distributional equity while responding to the impact of escalating home values are not unique to South Carolina. Other states have developed stopgap measures and partial solutions, but no state has come up 10

11 with a definitive answer that re-envisions a property tax better suited to the needs, the demands, and the challenges of the 21 st century. About the Author Holley Hewitt Ulbrich is Alumni Professor of Economics Emeriti at Clemson University, having retired in 1997 after 30 years on the faculty. A specialist in state and local public finance, she is a senior fellow at both the Strom Thurmond Institute and the Institute for Public Service and Policy Research at the University of South Carolina. At Clemson, she remains active in retirement in tax policy work and teaches both ethics and political economy in Clemson s doctoral program in Policy Studies. Dr. Ulbrich holds the BA, MA and PhD degrees in economics from the University of Connecticut and the Master of Theological Studies degree from Emory University. The author of eight books and numerous articles and technical reports, she is well-known as a consultant to public agencies at all levels from municipalities through the World Bank, including the South Carolina General Assembly. She spent a year in Washington as a senior policy analyst for the U.S. Advisory Commission on Intergovernmental Relations. Dr. Ulbrich was principal researcher on the recently released Palmetto Institute study of the South Carolina revenue tax system. ENDNOTES 1 Calculated from South Carolina Budget and Control Board, Office of Research and Statistics, Local government report The tax rate is called the mill rate or mil rate, after an old English coin called a mil, which is a tenth of a cent. A mill rate of 10 mills per dollar of assessed valuation is a rate of 1%. The tax is applied to assessed value of taxable property, which is some fraction of the market value. The formula for the tax for a particular piece of property, after applying any exemption, is: market value x assessment ratio x mill rate/1,000 = tax due. For example, a $300,000 apartment building, subject to a 6% assessment, in a jurisdiction with a mill rate of 220 mills, would pay: $300,000 x.06 x 220/1,000 = $3, The 1932 exemption of intangibles in South Carolina reflected a national trend toward narrowing the base of the property tax. See Steirer, A. Louise and J. Hite. (2005, December 15). Historical development of South Carolina s state and local revenue system, Columbia, SC: Palmetto Institute data from the 1980 Statistical abstract of the United States, Washington, DC: Government Printing Office data from U. S. Bureau of the Census. 5 Cico, D., et al. (2004, July). Property tax relief programs in the United States. See 6 The value was raised in 1997 from $20,000 to $50, See Op. Cit. Cico et al. (2004, July) for a summary of the various kinds of circuit breakers used by other states. 8 Miley, G. and Associates. (2005, December 5). Eliminating homeowner property taxes: an analysis of the state s competitive business climate. Report to the South Caroline Chamber of Commerce. 9 National Conference of State Legislatures. (2006, April 10). State fiscal footing stable today, uncertain tomorrow new NCSL report shows (press release). Washington, DC: NCSL. 10 California Taxpayers Association. (1993, November) Proposition 13: love it or hate it, its roots go deep. Retrieved April 27, 2006 from Sexton, T., Sheffrin, S., and O Sullivan, A. Proposition 13: unintended effects and feasible reforms. National Tax Journal 52:1 (1999, March): Sjoquist, D. and Pandey, L. (1999, November). Limitations on increases in property tax assessment. (Atlanta, GA: Andrew Young School of Policy Studies. 12 McIntyre, R. et al. (2003). Who Pays? A distributional analysis of the 50 states. (2d ed.) Washington, D.C.: Institute on Taxation and Economic Policy. Retrieved April 27, 2006 from 13 Some school boards are free to set their own mill rate and approve their own budgets. Others have limits on increasing the mill rate, while still others must submit mill rate requests and budgets to some other entity to approval, most commonly a county council or (in multi-district counties) a county board of education. 11

12 14 Lemov, P. (1995, August). The property tax blues. Governing Magazine. 15 Due, J. and Mikesell, J. (1994). Sales taxation: state and local structure and administration. Washington, D.C.: Urban Institute Press. 16 Op. Cit. McIntyre, R., et al. (2003). 17 Fischel, W. (2005). Homevoter hypothesis: how home values influence local government taxation, finance, and land use policies. Washington, DC: Urban Institute Press. 18 Boyd, D. (2005). State fiscal outlooks from 2005 to 2013: implications for higher education. Boulder, CO: National Center for Higher Education. And the Office of State Budget, State Budget and Control Board. (2005, December). Three-year General Fund financial outlook, FY to FY Columbia, SC, Author. 12

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