A bill that would change the way S.C. homes, businesses and other properties are valued for tax purposes is again in limbo as lawmakers look to real estate agents and local governments to strike a compromise.
The bill would eliminate a portion of a 2006 law that taxes property at its sales price when it is sold.
Known as "point-of-sale reassessment," real estate agents and business owners say the law has surprised would-be buyers with higher tax bills than previous owners were paying. That makes it more difficult to expand a business or close a real estate sale, they say.
But local governments say that eliminating point-of-sale reassessment would cut their revenue since voters also approved a 2006 amendment to the state constitution that limits increases in a property's tax value.
They also contend that rescinding the 2006 law would violate the U.S. Constitution since high-demand real estate likely then would pay taxes on a lower portion of its market value than real estate in less popular neighborhoods.
A Senate panel has told real estate interests and local governments to work out a compromise. Barring that, the panel has warned the point-of-sale issue - the top priority for real estate agents and some homeowner groups - is likely to go nowhere for the second year in a row.
"We had something last year that came real close," said Sen. Wes Hayes, R-York, referring to a compromise that would have limited tax increases on commercial property when it is resold. "I don't know that either side has given enough."
Last year's compromise effort crumbled when real estate agents asked for residential properties also to be exempted from point-of-sale reassessment.
Hayes told a Senate committee last week the chances of passing a bill this year to repeal point of sale are "virtually nil" without a compromise. With lengthy fights expected over a lawsuit reform bill and redistricting, the Senate's calendar is filling up, leaving little time for bills without significant support.
Democrats said Tuesday they cannot support a bill that state economists project would cost local government budgets $52 million next year and more every year thereafter.
Real estate agents initially supported the 2006 property tax reform law, including point-of-sale reassessment, said Sen. Darrell Jackson, D-Richland. "Good people live with their decisions and try to make the best of it," he added.
Real estate interests say they want to talk.
"We're ready, willing and able to sit down," said Nick Kremydas, director of the S.C. Association of Realtors. "It absolutely needs to be taken care of immediately."
However, local governments say a compromise isn't possible without addressing all of the 2006 tax reforms, including the constitutional amendment that limits increases in a property's value to 15 percent every five years.
More than 80 percent of voters cast ballots in favor of that amendment, making changing it politically difficult, if not impossible.