THE PROPERTY TAX - WHY IT PERSISTS
By Charlie B. Tyer
What's the only major tax common to all 50 states in the U. S.? The oldest tax levied in the U. S.? The second worst tax consistently in opinion polls of Americans? The tax people understand the least, hate the most, and yet will continue to pay despite these characteristics?
If you answered the local property tax, you're right. Of all the taxes in use in the United States, the property tax is probably the least understood. The mechanics of the tax are difficult to grasp for even the well-informed about government finance. The average lay person finds the property tax confusing and arcane. Couple this with the fact that it, unlike most other taxes, undergoes periodic reappraisal and adjustment and you have added confusion and misunderstanding.
Now, let's add another complicating factor--numerous local governments overlapping one another who utilize the property tax to fund all or substantial portions of their activities. (For example, a city, county, school district, a recreation district, perhaps a fire district, and a water or sewer district at the local level.) The local citizen, let's call him John or Jane Smith, receives his or her tax bill in the mail. Understanding little about the property tax, all John and Jane really know is that their taxes have increased. Perhaps only one of the jurisdictions listed above raised their property tax levy. The Smith's may not know that. They simply are upset that their taxes have gone up. So, every entity receives some of the blame.
In the following pages we will examine how we rely on the property tax for local government revenue, how it's burden is distributed, the reasons it is so disliked and yet persists, it's administrative cycle, and some things we can do to improve it.
Reliance on the Property Tax
Despite the complexity of the property tax, and the fact that it's "the tax people love to hate," it remains the mainstay for most local governments in the United States. The last two decades, however, have seen a slight decline in degree of reliance upon the tax by cities and counties nationwide. For example, in 1976 the property tax contributed 42.8% of general revenues to all cities in the U. S., and 57.2% of county general revenues. By 1986 these percentages had dropped to 29.5% and 43.7%, respectively.
The S. C. Advisory Commission on Intergovernmental Relations (ACIR) reports that in our state the property tax is the "primary local tax revenue source" producing 91.8% of local tax revenue, versus 73.7% nationwide. We have to quickly note though that cities and counties also rely on other local revenue sources that are not taxes, such as business license fees and other fees and charges. In addition, they also receive some state-shared revenues. When these sources are taken into account, our local governments rely on the property tax for about 27% of their revenues from all sources versus a national average of 28.4% in 1987. Of course, any individual governmental entity can vary significantly from an average, and they do.
As most people know, school districts rely on the property tax heavily. Indeed, the bulk of property tax moneys raised at the local level are devoted to education, not city or county services. In 1987, for example, 58% of property taxes went to our schools in South Carolina, 26% went to counties, 14 % to cities and the remaining 2% to special purpose governments, according to the S. C. ACIR. Again, individual cases can vary. For instance, someone living in the Town of Irmo in Lexington School District Five in 1991 paid 61.4% of their property tax levy to the school district.
And, if there is a subject more confusing than the property tax, it is probably school districts and their governance in S. C. Suffice it to say there is no pattern that is neat and simple. Nor do the districts have only three or four organizational forms and related powers to choose from like cities and counties do. Only 13 of the state's 92 districts have complete fiscal autonomy. The rest must seek some type of approval from either a county board of education or their county council. Obviously, this makes it difficult to know exactly who is responsible for making property taxation decisions and results in a great deal of confusion, particularly for new residents coming into our state.
Key Terms in Understanding the Property Tax
Part of the difficulty in understanding the property tax for the lay person lies in the vocabulary unique to the tax. Therefore, before proceeding further we need to grasp some basic terms. Property taxation in its simplest form involves four phases.
First is the appraisal of property values for tax purposes resulting in an appraised value. This may or may not be market value, a fact frequently not understood. While some states try to use market value for tax purposes, many do not. One reason is that it is difficult to maintain accurate market values when property has no recent sale record to draw upon. Appraisal is complex and conducted by legally specified standards, often under state guidelines, or at least oversight. In South Carolina, the State Tax Commission appraises statewide the following four types of property: manufacturing, industrial, transportation and utilities. Appraisal information is then provided to each county on these properties in their jurisdiction. Counties appraise other properties.
Second is assessment. This adjusts the appraisal to determine the taxable value of property. Differential assessments usually require some type of property classification system which we will discuss below. Such differentials are expressed as assessment ratios.
Third is the tax rate. We often use the term mil or millage to establish the rate of property taxation. This terms goes back to our English heritage and refers to an old English coin that was worth one-tenth of a cent. Another way of expressing the value of a mil is to remember one mil is .001 of a dollar. Thus, a millage would be converted to a decimal by multiplying the millage by .001 and then using this figure to multiply by the assessed value of a taxing entity, or a property owner, to get a tax figure. The property tax rate is set by cities and counties in South Carolina for their respective jurisdictions. School districts vary in who sets their tax rate. Special purpose governments also vary, many having legislative ceilings on their tax rate, or lack access to the property tax altogether.
Fourth is collection. This involves the preparation and distribution of tax notices for current taxes and for delinquent taxes. Local governments don't collect 100% of the taxes due them for a variety of reasons. Thus, they usually talk in terms of a collection ratio to forecast how much of their tax levy they anticipate collecting. Special efforts are required to collect taxes that are deliquent, with sensitivity for special hardship cases. Aggressive deliquent tax collections raise the collection ratio while inattention will lower it. A good ratio is typically between 95 and 98 percent.
Distributing the Property Tax Burden
There are a number of ways governments can influence where the property tax burden falls. These include: classification of property for tax purposes, using homestead exemptions and circuit breaker programs, use-value appraisals, and tax abatements. These also add to the complexity of the property tax, of course. And, their use may be prompted by other motives or objectives than revenue collection or shifting of a tax burden--for example, fostering economic development and bringing jobs into the state. Whatever the case, a brief look at each of the above concepts is warranted if one is to understand this thing we call the property tax.
There are two types of property--real and personal. Real property refers to land and improvements to it, such as buildings. Personal property refers to property that is mobile and includes tangible property, such as furniture, equipment, inventory, vehicles, jewelry, furs, etc., and intangible property such as stocks and bonds, and bank accounts. Over the past 30 years the trend has been to shift away from personal property toward real property for tax purposes. To a large extent this has been due to the difficulty of discovering and putting a value on personal property. Discovery in many cases has meant asking the taxpayer to list his or her property. In other words, one relies on the honesty of the citizens to disclose the amount and value of property they possess. When they fail to do so, the honest taypayer obviously bears the burden for his or her dishonest neighbor. The distinction between real and personal property will be recalled in our discussion below.
Classification. The concept of classification of property involves grouping property by type or class, and then treating each class differently by applying a different assessment ratio for each class, as in 18 states, or a different tax rate, as in four states and the District of Columbia. The classes of property used in South Carolina are: owner-occupied real estate, agricultural and forestry land (assessed at 4% of appraised value); commercial property, including rental property (assessed at 6% of appraised value); transportation for hire companies (assessed at 9.5%); and, manufacturing and industrial property, utilities and some types of personal property, such as cars, trucks, boats, aircraft and business equipment (assessed at 10.5% of appraised value).
State legislatures must deal with two issues when they legislate classification systems (provided they are not in the state constitution as in South Carolina). The first is the number of classes of property to create. The second is the degree of differentiation among the classes they create. Most of the 22 states that classify property use between two and four classes, as does South Carolina. Moreover, it is widely understood that political rather than economic criteria underlie state classification policies. Therefore, residential and agricultural property are usually the most favored classes in states that use classification. Sometimes, however, classification can be used to extreme, as in Minnesota which began with four classes in 1913 and now has innumerable classes which has created an administrative nightmare for assessors and resulted in inequitable assessments in the eyes of many.
Differentiation between the classes of property, likewise, is a political decision. Why should South Carolina's assessment ratios be 4, 6, and 10.5 %, for example? Mississippi assesses all property at 15% of appraised value, except for state appraised utility property which is assessed at 30% of its value. Montana has 16 classes of property with levels of assessment ranging from 3 to 50% of appraised value. These are political decisions, not economic ones.
South Carolina joined the reform trend in property taxation when it legislatively required the State Tax Commission to monitor local property assessments with studies that verify the ratio of assessed value to actual market value for real property. Basically there is a range of 80 to 105 % of actual market value that local assessors must be within with their assessed values or otherwise face madatory reappraisal, under state oversight. The state also monitors the uniformity of assessment levels in each county. This oversight usually means that counties with substantial growth will reappraise their property about every four years. A rural area with less growth may go twice as long before reappraising its property.
Most classification systems favor residential property owners and agricultural property. As a result industry and business often lobby for changes which would place everyone on the same level, a change which would effectively reduce their taxes and raise those of homeowners and farmers. This has been and continues to be a controversial subject to many.
Another noteworthy point about classification sytems is that few people understand them. Many citizens in S. C., for example, probably don't understand that their tax bill is based upon their property being assessed at a certain ratio (4% for owner-occupied homes) which determines the value they see on their tax notice. Thus, a home appraised at $100,000 would be assessed at $4,000. The citizen seeing that figure on a tax notice is probably confused as to exactly what value has been attached to his or her property and how it will be used to determine a final tax liability. Typically only in a reappraisal year is the actual market value of property placed on an assessment notice which can be readily understood by a taxpayer.
In spite of these characteristics, classification systems do shift the tax burden away from residential property owners and farmers to other types or classes of property. Unfortunately, one of these may be owners of personal property. In S. C. personal property is assessed at 10.5% of actual value. Thus, autos are taxed at a higher classification than homes. As a result, some people pay as much or more tax on their cars than they do on their home, in spite of the fact that their home is worth more. Some experts have questioned whether this shifting of the tax burden is fair, particularly in an era when an auto is almost a necessity if one is to work, and with escalating costs of autos.
Homestead Exemptions and Circuit Breaker Programs. Homestead exemptions are one of the more commonly used property tax relief measures for residential property owners. Exemptions of some type are currently used in 45of the 50 states. The exemption works by partially exempting some of the taxable value of property thereby lowering the tax burden on the property. In South Carolina, the elderly and disabled may exempt the first $20,000 from their residential property's appraised value. Thus, if one had a home appraised at $75,000, for example, it would be listed on the tax rolls at $55,000 and 4% multiplied by that figure to arrive at an assessed value of $2,200. The owner of a $75,000 home who did not receive a homestead exemption would have an assessed value of $3,000. If these two people live in the same taxing jurisdiction with a 300 mil property tax, the one with the homestead exemption would save $340 that the other taxpayer would have to pay.
In South Carolina local governments do not lose this money. The state reimburses the localities for revenue lost through such exemptions. This dilutes the burden of having to compensate for the exemption by allowing it to be spread over the entire state. More than 150,000 households in South Carolina receive homestead exemptions. Note that our state's program is not targeted to the low income. It applies to anyone disabled or elderly, regardless of income. Nineteen states use a means test, or direct the exemption specifically toward lower income individuals, while 26 others grant exemptions to all homeowners, irregardless of income.
The other major mechanism aimed at reducing the property tax burden for some citizens is the circuit breaker program. South Carolina does not use this presently. The circuit breaker is usually a state income tax rebate for part of the property tax based on an income ceiling so that the tax does not fall as heavily on the low income. Some states make the program available to all households, while others limit it to low income elderly, the disabled, homeowners, or others. Income ceilings found among the states range from $5,000 in West Virginia to $82,650 in Michigan. Most, however, are in the $5,000 to $20,000 range according to the S. C. ACIR.
Use-Value Appraisals. Use-value or production value appraisals give preferential treatment to farmland and open spaces by basing the value of property for tax purposes on how the land is used rather than its best possible use, or market value. The intent is to reduce the pressure on open space and farmland to be converted to other uses in urban areas, and the environs of urban areas. Agricultural land gets some form of relief in 47 states, including South Carolina.
Tax Abatements. Abatements are the most popular tax incentive in use and the least costly to administer. They operate by temporarily reducing the property tax burden of a business. At least 30 states have authorized the use of tax abatements. In South Carolina state law provides that new or expanding industry may receive a 5-year moritorium on property taxes which would have been paid to county and city governments. School taxes are not exempt, however. This is meant to encourage economic development.
In addition, counties are now authorized to negotiate a flat fee for services in lieu of property taxes with new industries that invest more than $85 million or more in the jurisdiction. This fee, however, covers school as well as county taxes. And, how to account for fees in lieu of taxes can become quite controversial as illustrated in Richland County in 1992 when School District One did not count some fees as tax money coming from the county and the county did. The issue ended up going to court. The net effect, locally, of such fee arrangements is that school districts tend to lose tax revenue they otherwise would have received, and counties gain some revenue they would not have received, expecially in the first five year period of the fee when their property taxes would have been abated under normal circumstances.
Tax abatements are controversial. Some observers feel that government too often gives away too much in an effort to lure new industry. With the practice being so widespread, however, it is difficult for governments not to offer them and in the process appear to be less competitive than other governmental neighbors.
Tax Exempt Property. Property tax burdens are also shifted in a way most people don't realize. In the U. S., the property of the federal, state and local government is not taxable. This is the concept of intergovernmental tax immunity. The logic is that the power to tax is the power to destroy. Therefore, one government should not be able to tax another government. More than governmental property is tax exempt, however. Church owned property is also exempt in order to assure freedom of religion under the U. S. Constitution. Exemptions are also provided by state law for various groups of taxpayers, such as disabled veterans and people required to use a wheelchair. For some communities, like Columbia, the amount of tax exempt property as a proportion of all property subject to taxation is very high. Thus, the property tax burden is effectively shifted from non-property taxpayers to those who do pay the property tax.
The Case Against the Property Tax
Only the federal income tax is consistently rated as worse than the property tax in opinion polls. There are a number of reasons why the public seems to resent the property tax. These include: (1) the taxation of unrealized capital gains by the property tax; (2) the fact that it is paid in large lump-sum payments by many taxpayers; (3) public anxiety about reappraisal of property values; and (4) inequitable assessments and appraisals.
Taxing Unrealized Capital Gains. The property tax is levied on property values, or wealth in a sense, and not on income or consumption like the income tax or the sales tax. Thus, those who are cash poor, like many retirees and elderly, may own property which has considerable value but lack the income necessary to pay property taxes. Other taxes, like the income tax, defer taxing capital gains until such time as the taxpayer actually realizes income from a gain. The property tax doesn't defer taxing such gains. Thus, someone who bought a home in an area that appreciates in value a great deal will have to pay taxes on the growth in value, even though their income may not have grown accordingly.
Concepts like the circuit breaker, homestead exemptions, and tax deferral programs have been developed in large part to alleviate some of the inequities and burdens generated by the property tax. We've already discussed circuit breakers and homestead exemptions. Tax deferral programs typically delay tax payments until property is sold or an estate is settled. Thus, it is tantamount to a loan without interest from a local government, rather than a subsidy. Sixteen states and the District of Columbia offer a tax deferral program of some type, typically being restricted to the elderly. It is not available in South Carolina.
Lump-Sum Payments. Many mortgage lenders today escrow payments for property taxes for home mortgages thereby converting the property tax liability into installments for those property owners. For those whose mortgage company doesn't escrow this tax, or who don't have a mortgage, or have opted not to have the tax escrowed, the payment is due annually in one lump-sum payment. In South Carolina personal property, like cars, are also taxed and payments due in lump-sum payments. These personal property taxes are not usually eligible for any type of installment payment comparable to a mortgage payment. Thus, they are highly visible and for two-car families (or more) will typically amount to several hundred dollars a year.
Like the income tax, the property tax at some point is totalled and the resulting tax liability is plainly evident. The sales tax, to the contrary, is paid in small transactions so that one usually doesn't realize the amount of the tax paid in a year. So, even if a lump-sum payment isn't made in all cases for property taxes, the level of taxation alone may generate taxpayer resentment. Add to this in some cases the necessity to pay the tax in one payment, and considerable resentment is easily understandable.
Anxiety About Reappraisal. Many taxpayers fear reappraisals of property values out of a fear that their tax will rise accordingly. The less frequently property is reappraised, the higher the level of taxpayer anxiety. This is due to the fact that the longer the period of time between reappraisals, the greater the chance that significant inequities have developed between property owners. And, the louder will be the complaints of those who have benefited from undervaluation of their property.
The anxieties surrounding reappraisal were graphically illustrated in Richland and Lexington Counties in 1992 in a sharply drawn contrast. Lexington had not reappraised in 10 years. Richland had an ongoing program to reappraise every 4 to 5 years. Richland County residents voiced relatively few complaints. Lexington County, on the other hand, had over 17,000 appeals resulting from the reappraisals. In addition, the revised assessment notices mailed to the citizens carried a statistic which showed the percentage increase in market value since the property in question was last appraised. Many taxpayers assumed this percentage would be the rate by which their tax would increase Taxpayers had to be repeatedly assured that this was not necessarily so. Again, though, the method of computing the property tax is arcane to most people. Therefore confusion and anxiety was widespread. The Lexington situation illustrated first hand why reappraisals should be conducted frequently. Every county councilmember who was opposed in a primary in 1992 was defeated, due in part to resentment about reappraisals in the County.
Inequitable Appraisals. Property appraisals are often perceived as being unfair which breeds resentment. Some of the reasons that appraisals may be inequitable are:
·some state laws permit assessments at a fraction of appraised value;
·reappraisals have been irregular or infrequent;
·qualified personnel may not have performed the property appraisals;
·state oversight may have been lacking to assure uniformity and professional practices.
Fortunately for South Carolina, fewer of these factors have existed in our state than in other states in the nation. (This is due to the large rule the state plays in property taxation in S. C. See the accompanying sidebar "The State Role in Property Taxation in S. C.") Having said that, however, we have not been without some difficulties at times. Controversy has arisen in some areas over inappropriate use of agricultural assessments for vacant land which by most standards was not being used for agricultural purposes. Property around Lake Murray in the midlands of South Carolina generated such attention about the equity of assessment procedures in the early 1990s.
The Case For the Property Tax
One might rightfully ask, given the resentments against the property tax, why does it persist? There are a number of reasons why. Chief among them are the fact that it provides a stable source of revenue for local governments; nonresident property owners are taxed; it is often used to finance property related services and to construct publicly owned infrastructure; it is difficult to evade; and, it has enabled local governments to maintain some autonomy from state and federal control.
Stable Source of Revenue. For all its disadvantages, the property tax does have one advantage over rival revenue sources, such as the income tax and sales tax. It does not fluctuate as quickly with local and national economic ups and downs. When the economy is up, that may be a disadvantage. But, when it is down, one doesn't find sudden, unexpected drops in property tax revenues of significant proportions. Thus, it is relatively stable. And, in most cases predictable as well. To appreciate predictability, one need go no further than recall the difficulty the state of South Carolina has experienced in recent years with its revenue forecasting and the resulting budget reductions, often necessary in mid-year. One doesn't find this very often in local government, and the stability and predictability of the property tax is probably one of the chief reasons.
Reaches Nonresident Property Owners. Property owners who benefit from local services, but who live in other locales may often avoid sales and income taxes. But, they don't avoid the real property tax. Particularly property that is income producing needs to share its portion of the tax responsibility for financing government. By reaching nonresident owners, the property tax helps distribute the tax burden to all who should pay something.
Finances Property Related Services. Local government services like police and fire protection, construction and maintenance of streets, curbs, sidewalks, and stormwater drainage systems benefit most all in a community. Good services and solid infrastructure in a local government will, other things being equal, result in higher property values than in other communities with lower quality services and inadequate infrastructure.
Difficult to Evade. Failure to pay property taxes may result in a lien on the property, and utlimately in a tax sale to recoup the delinquent taxes. Compared to other taxes, collection rates for the property tax are relatively high, ranging often from 92 to 98 percent collection ratios. Although admittedly legally complex, property taxes are harder to evade than other taxes. Observe, for instance the controversy over mail order sales tax collections by state governments. Or, trying to collect income generated in another state. The property tax is much harder to evade and avoid.
Promotes Local Autonomy. Finally, the property tax provides more than security and stability for many local government, it also can provide a measure of independence. Local governments are subject to a variety of state and federal forms of oversight. As political subdivisions of the state they are circumscribed by constitutional and statutory requirements and constraints, such as forms of government they may use, revenue raising options, and general powers and duties.
In short, local governments are often dependent upon higher levels of government. Often, this translates into financial dependency. Yet, local governments are the closest to the people, and in the eyes of many the most accountable to the people. The property tax allows many local governments to be responsive to their citizens and deliver the services they need and desire. Why? Because for many governments, as in South Carolina, it is the only tax local officials have effective control over. In the words of one observer, "without a steady, strong flow of revenue, local governments cannot govern." The property tax is an important source of local revenue controlled at the local level.
Room for Improvement
Can the property tax be improved to alleviate some of the resentments people have toward it? Yes. In 1991 the S. C. ACIR published an analysis of taxation in South Carolina called Financing Government in the Palmetto State. In it they listed several possible reform options for our property tax. A sampling of some of these include:
(1) Consider a circuit breaker to reduce the burden of the tax on those least able to pay it. In addition, the current homestead exemption could be modified by a means test to target it to those most in need of it.
(2) To make the property tax on residences fairer, rental as well as owner-occupied homes could be assessed at 4% thereby providing some relief for renters.
(3) The state could consider payments in lieu of taxes to local governments with large concentrations of exempt property due to state ownership of facilities.
(4) Property tax impact studies could be done when the state considers its state aid to subdivisions, alternative local revenue sources, and mandates which require localities to bear higher costs or programs and services.
The ACIR, as many other observers, recognizes that the property tax will continue to be an important local revenue source. Our challenge is to ameliorate its worst features. And, help our citizens understand this most difficult of all taxes.
Sidebar Included With Article
The State Role in Property Taxation in South Carolina
By national standards, property taxation in S. C. is more efficient, effective and fairer than in most other states. The reason in large part is due to the role played by the S. C. Tax Commission in property taxation. That role can be grouped into four main areas of activity: appraisal of property under the jurisdiction of the Tax Commission; approval of property tax exemptions; monitoring and review of county assessors, auditors, treasurers and delinquent tax collection; and, education and training for property tax appraisers.
Appraisal of property. The Tax Commission is responsible for the appraisal of certain types of property statewide. These include manufacturing real and personal property, utilities (which includes power companies, phone companies, and even railroads), transporation companies for hire, such as railroads and pipelines, and business personal property (business inventory is now exempt from taxation by state law).
Totalled, these properties compose about one-third of the property tax base in S. C. State law places them directly under the Tax Commission's jurisdiction for appraisal purposes. Each year the Commission certifies the values of these properties to the county auditors in the 46 counties. Local governments then apply their tax rates, or millage, to these classes of property just as they do to those appraised by the counties using a uniform tax rate. (Interestingly, the state still uses two state property taxes itself. These are on airlines and private railroad car lines. The Tax Commission administers these as well.)
Approval of property tax exemptions. Groups, organizations or individuals which are authorized exemptions from property taxation by state law must apply for the exemption to the Tax Commission, but then hold the exemption in perpetuity until ownership changes. Governments, however, are exempt from the application requirement. Examples of such exemptions include churches, boy and girl scout organizations, disabled veterans (who may exempt their home, five acres of land and one car), and people required to use a wheelchair. The Tax Commission currently has over 20,000 accounts it maintains records on for exemptions. Each year it certifies exemptions to the county auditors and will monitor them.
Monitoring county Assessors, Auditors, Treasurers and delinquent tax collection. Since the passage of Act 208 in 1975, the Tax Commission has assumed an important role in oversight and monitoring of local financial officials involved in property tax administration from the appraisal process to collection of the tax. Much of this is done by annual studies of the counties which focuses on property sales and comparing those sales to the appraisals on those properties.
Each year a sales-appraisal ratio study is conducted statewide by the Tax Commission. This study compares property sales to the level of appraisal in each county. In 1992 over 44,000 sales were used for this study. From these a level of appraisal is determined. This level is used to provide an estimate of true market value of real estate, distribute state aid for elementary-secondary education, and to measure the level of uniformity in the appraisal of real property within and among classifications throughout the counties. Commission regulations reguire that a median level of appraisal be maintained in each county for all property as a whole or for any class which may not be higher than 105% or lower than 80% of value. When these standards are not met, the Commission issues an order requireing reappraisal to occur within two years. And, they determine if the reappraisal is acceptable or not!
Another use of the sales-appraisal ratio study is to determine the uniformity of assessment levels within each county. If property owners are not assessed uniformly, their taxes will not be uniform relative to the value of their property and the tax would be inequitable. Uniformity is determined by using a coefficient of dispersion, or the index of inequality.
This index measures how closely the individual ratios of sales to appraisal are arrayed around the median ratio. In numerical terms, the index shows how far the middle fifty percent of the ratios are from the media, or how far one must deviate from the median ratio to encompass the middle fifty percent ratios. For instance, a 15% index of inequality means that half of all the ratios fall within 15% of the median. The closer the ratios are grouped around the median, the more equitable the appraisal of property, and vice versa. If the index of inequality for a county is higher than 15%, that will also bring an order for reappraisal from the Tax Commission.
When reappraisal occurs at a county level, the Tax Commission must accept the program before the new appraised values can be used for tax purposes. During a reassessment year, the Commission also is more active in its oversight and monitoring of local governments affected by reappraisal. State law forbids more than a one percent windfall tax collection due to reappraisal (minus new construction) unless additional taxes for increased, expanded or new services are itemized on a tax notice for the citizen as a truth in taxation measure. Thus, the Commission monitors prior year collections and reassessment year collections of property taxes in order to assure the law is followed.
Education and training. Finally, the Tax Commission is responsible for an annual school for property appraisers to see that they are adequately trained. Act 208 of 1975, which created uniform property classifications and assessment ratios statewide, also charged the Tax Commission with overseeing appraisers. Through regulations, the Commission has required them to receive continuing education offered through the Tax Commission annually.
Recently, however, a new dimension has been added to training of appraisers. The federal government now requires that appraisers by licensed by each state. Thus, S. C. created the Appraisers Board which licenses three levels of property appraisers: registered, licensed and certified appraisers. Interestingly, most states do not require that government appraisers be licensed, but S. C. does. Of the 1,000 licensed appraises in S. C., about 200 are in the property tax field. This new board now determines educational requirements for licensure and recertification. The Tax Commission monitors the property tax appraisers to assure that they are certified, and that they go to schools for continuing education credits that are approved by the Tax Commission. This adds to a more professional level of appraisal than in many other states.
South Carolina has much more involvement and control by the state in property taxation than most other states. With this has come more professionalism and reduced criticism of the administration of the property tax. The role of the Tax Commission in this regard cannot be overstated.
Tyer, Charlie B. "The Property Tax: Why It Persists," The South Carolina Policy Forum Magazine, Vol. 4, no. 2 (Spring 1993): 12-21.