April 30, Mr. Wesley Bryant Georgetown County Attorney PO Drawer Georgetown, SC Dear Mr. Bryant,

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1 April 30, 2010 Mr. Wesley Bryant Georgetown County Attorney PO Drawer Georgetown, SC Dear Mr. Bryant, SCAC has been asked to address the questions of whether the rollback millage rate applied after countywide reassessment can be greater than the millage rate used in the year preceding the reassessment, and whether the rollback millage is subject to the Act 388 millage rate cap. Based on a review of prior SC court decisions and Attorney General opinions if the statutory formula used to calculate the rollback millage resulted in a rate that was greater than the prior year s millage, then that is the rate that must be used. However, it also appears that the statutory limitation on millage rate increases imposed in Title 6 of the SC Code would apply to the rollback millage. Statutory Imposition of Rollback Millage Rate. SC Code _ (E) requires the county to use a rollback millage in setting the general obligation millage rate once the county conducts a reassessment program. Reassessment programs must be conducted every fifth year as required pursuant to _ Section (E) provides: Rollback millage is calculated by dividing the prior year property tax revenues by the total assessed value applicable in the year the values derived from a countywide equalization and reassessment program are implemented. This amount of assessed value must be adjusted by deducting assessments added for property or improvements not previously taxed, for new construction, and for renovation of existing structures. The SC Supreme Court in Angus v. City of Myrtle Beach; 363 S.C. 1,609 S.E.2d 808 (2005), held that _ (E) does not provide for any adjustment of the formula for calculating the rollback millage rate. In that case the city had inserted two variables in their calculation to take into consideration an estimated number of taxpayer appeals of assessments, and for an estimate of taxes that would go uncollected. the court held that the city could not vary the formula imposed by statute. The court reasoned that the city could use the then existing override provisions contained in subsection of _

2 Based on the reasoning of the Myrtle Beach case, it appears that if the combination of property value assessments, and new construction used as the basis for rollback calculations determined that a higher millage rate would be necessary, that is the calculation that must be used. Without some other statutory authorization or requirement the county would have to use the rollback millage rate calculation required by _ (E). Effect of Act 388 limitations upon rollback millage rates. The second part of the county s question asks if the rollback millage rate can be greater than the previous year s then would that rate be subject to the increase limitations found in _ (A) as amended by Act 388. Act 388 of 2006 limits the county s ability to increase the millage rate imposed for general operating purposes to the extent of the increase in the consumer price index, and the increase in population over the previous year. In addition, the Act limits the ability of the county to override the rate cap to certain circumstances for limited amounts of time. The millage rate cap is found in _ (A), and provides: Notwithstanding Section (E), a local governing body may increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only to the extent of the increase in the average of the twelve monthly consumer price indices for the most recent twelve-month period consisting of January through December of the preceding calendar year, plus, beginning in 2007, the percentage increase in the previous year in the population of the entity... However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section (E), must be used in lieu of the previous year s millage rate. Section (A) limits the growth of general operating millage to the previous year s operating millage, plus the increase in the 12-month average CPI and increase in population. The last sentence in that section however, requires that after the county implements a reassessment program, the rollback millage rate is used in lieu of the previous year s rate. Therefore, the rollback millage calculated pursuant to _ (E), replaces the previous year rate as the basis for determining the maximum total rate allowable for general operating purposes. The _ (A) limitation calculation becomes the rollback millage rate, plus the increase in the 12-month CPI and the increase in population. I hope this answers the county s questions. Please feel free to contact me if there are any clarifications or further questions. Sincerely, John K DeLoache Staff Attorney cc: Sel Hemingway, County Administrator History of Statutory Acts related to Millage Increase Limitation ( (A))

3 1997 Act 138 Section Millage rate increase limitation; exceptions. (A) Notwithstanding Section (E), a local governing body may only increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the prior tax year to the extent of the increase in the consumer price index for the preceding fiscal year. However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section (E), must be used in lieu of the previous year's millage rate Act 114 _4 W. 1. Section (A) of the 1976 Code, as added by Act 138 of 1997, is amended to read: "(A) Notwithstanding Section (E), a local governing body may increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only to the extent of the increase in the consumer price index for the preceding calendar year. However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section (E), must be used in lieu of the previous year's millage rate." 2006 Act 388 Part II _2 SECTION 2. A. Section of the 1976 Code, as last amended by Act 145 of 2005, is further amended to read: "Section (A) Notwithstanding Section (E), a local governing body may increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only to the extent of the increase in the average of the twelve monthly consumer price indexes for the most recent twelve-month period consisting of January through December of the preceding calendar year, plus, beginning in 2007, the percentage increase in the previous year in the population of the entity as determined by the Office of Research and Statistics of the State Budget and Control Board. However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section (E), must be used in lieu of the previous year's millage rate. Rollback Millage ( (E)) 1995 Act 145, Part II. _119(B) B. Article 3, Chapter 37, Title 12 of the 1976 Code, is amended by adding: "Section (A) Property classified pursuant to Section (c) is exempt from property taxes levied for other than bonded indebtedness and payments pursuant to lease-purchase

4 agreements for capital construction. 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 based on the amount available in the State Property Tax Relief Fund. (B) Taxing entities must be reimbursed, in the manner provided in Section 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 (3). (E) In the year of reassessment the millage rate for all real and personal property must not exceed the rollback millage, 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." 1996 Act 401 _1 SECTION 1. Section (E) of the 1976 Code, as added by Act 145 of 1995, is amended to read: "(E) In the year of reassessment the millage rate for all real and personal property must not exceed the rollback millage, 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. Rollback millage is calculated by dividing the prior year property tax revenues by the adjusted total assessed value applicable in the year the values derived from a countywide equalization and reassessment program are implemented. This amount of assessed value must be adjusted by deducting assessments added for property or improvements not previously taxed, for new construction, and for renovation of existing structures." 1998 Act 442 _4B B. Section (E) of the 1976 Code, as last amended by Act 401 of 1996, is further amended to read: "(E) Rollback millage is calculated by dividing the prior year property tax revenues by the adjusted total assessed value applicable in the year the values derived from a countywide equalization and reassessment program are implemented. This amount of assessed value must be adjusted by deducting assessments added for property or improvements not previously taxed, for new construction, and for renovation of existing structures." 2006 Act 388 Part 1 _4C

5 C. Section of the 1976 Code, as last amended by Act 226 of 2004, is further amended to read: (A) (B) (C) (D) (E) Rollback millage is calculated by dividing the prior year property tax revenues by the adjusted total assessed value applicable in the year the values derived from a countywide equalization and reassessment program are implemented. This amount of assessed value must be adjusted by deducting assessments added for property or improvements not previously taxed, for new construction, and for renovation of existing structures.