Tax Swap & Tax Hike
by Alex Saitta
June 2, 2007
This article was in the Easley Progress of January 17. My comments are in red.
School District Facilities Tax Down 70 Miles From Last Tax Bill
While the School District of Pickens County is making steps to offer state of the art opportunities for area students through its facilities plan, district representatives are quick to clear up any confusion about how the funding will affect local taxpayers. While the plan will cost $315 million, the plan has coincided with a state tax cut on property taxes that will help relieve local taxpayers.
(Well reported and well written.)
“There has been some misconception that funding for the facilities plan will increase a homeowner's taxes. ln reality, the average homeowner who is assessed at 4 percent will see a net reduction in taxes,” Dr. Lee D'Andrea, SDPC superintendent said. The reduction is the result of Act 388 which eliminates millage for school operations.
(This is a good point that I’m pleased the reporter made. THE STATE will raise the sales tax 1% on June 1 and THE STATE will lower property taxes on owner occupied homes on January 1. When the sales tax rises and property taxes on some homes does not drop, those people will be upset and wrongly blame the legislature. It will not be that state’s fault that the property tax on homes worth $100,000 or less will not fall. The school board will be the culprit, because their tax hike took away the property tax reduction. See below.)
The average homeowner was assessed 109 mills for school operations and 19 mills for school debt in Tax Year 2006. In Tax Year 2007, those same homeowners will be assessed 58 mills only for school debt, a net reduction of 70 mills. So for a homeowner that has a $100,000 home, they paid $512 in taxes to the school district in 2006. This year, that same homeowner will pay only $232 to the school district.
(That is untrue. On a $100,000 owner occupied home, the debt service tax is 19 mils. The new state law does not exempt school debt service millage. Due to the school board tax hike, that rate will rise by 39 mils.)
For school operations on the $100,000 home, there is currently a credit equal to the adjusted 1995 millage rate of 70 mils. The new state law will raise that credit to 109 mills or by another 39 mills.
Net, the owner occupied home of $100,000 will see debt service millage rise by 39 mils due to the school board tax hike, and operations millage go down 39 mils due to the new state law. It will be a wash. Owner occupied homes of $100,000 and less in the county will not see a reduction.
By the way, if you live in the city of Pickens, and live in a home worth less than $100,000, you'll see a property tax increase. The state credit will subtract 39 mils, the school board is adding back 39 mils, and the city of Pickens is adding 6.3 mils to that. Net, those folks will pay higher sales taxes and higher property taxes. )
“It's still going to be less than it was last year for the legal resident...
(If an owner occupied home is worth $100,000 or less, the tax will not be less, as I explained above. Call George Bryant on this. He’ll confirm it. Actually, he was the one who explained it to me.)
That's good news for the people in a residential home and it's bad news for all the other properties across the county be-cause they will see an increase,” Pickens County Auditor George Bryant said in a December inter-view.
(It is good news for those who occupy a home worth more than $100,000. As a home rises above $100,000 in value, that home will start to see a reduction in taxes. The higher the price of the home, the more the reduction. I remember reading at reassessment time the median home in Pickens County is valued at about $135,000.)
Also included in Act 338, known as the property tax reform, sates tax on food is reduced from 5 cents to 3 cents.
(In Pickens County, that rate fell from 6 percent to 4%, because our sales tax is 1% higher than the state’s rate.)
School operations and bond taxes are left on the tax bill as well as taxes on cars and commercial property.
(This statement needs to be expanded on. Owner occupied homes make up 1/3 of the property in Pickens County, but 2/3 of the property in the county is other property like motor vehicles, vacant land, rental properties and businesses. None of that property will get any property tax relief from the state, so those properties will continue to be charged school operations and debt service taxes. Last year school operations was 109 mils, and 19 mils for debt service. The school board raised the debt service rate by 39 mils to 58 mils. The 39 mil tax hike on motor vehicles, vacant lan, rental properties, and businesses will start to show up on tax bills on July 1.)
The sales tax was raised 1 cent because of the bill's passage.
(Yes. It was a tax swap, not a tax cut. Property taxes on most owner occupied homes is going down, but the sales tax is going up. What the typical person saves on taxes on their homes, they’ll pay in more sales taxes, and higher taxes on their cars, second home, etc.)
Whatever their opinion of the bond being approved by the SDPC, residents agree that industry and commercial owners will bear the largest burden to pay off the projects. Many local business owners have not been in support of the bill because it will raise their taxes significantly. They will still be required to pay the current millage, plus the 39 mills added to the school debt.
(Businesses get a double-whammy. On June 1 their sales tax goes up 1%. On Jan 1 the property tax on their building and equipment will rise 39 mills. Again, they get no state property tax relief.)
According to Bryant, the mill increase translates to an additional $240 for every $100,000 value of commercial property. Last year commercial property valued at $150,000 paid $1,628 in taxes. This year, they will pay $1,988 in taxes. “A 33 percent school tax increase will in fact close some businesses,” said Dave Watson, a small business owner and Easley City Councilman in an interview in December, “Large businesses will not feel the impact but mom and pops will... the elderly who purchase duplexes and rental property to supplement their income, business owners that have a salary less than $20,000 per year.”
(The tax swap law was just that. Reduction in property taxes will be offset by a higher sales taxes. Then the district laid on top of that a $575 million of new property taxes. There is tax shifting going on by the state, but there is also a huge property tax hike in there too by the school board. Overall, taxes in Pickens County are going up, and the residents will have to pay it.)