In the Senate Thursday debate continued on what is known as point of sale taxes on real estate. On the final day of the Senate this week, two major players in the Senate, Rules Committee Chair Larry Martin of Pickens and Finance Chair Hugh Leatherman suggested moving the bill back to committee or even taking a vote on Monday. Leatherman says that such complex taxation details should be worked out in committee, not on the Senate floor when there is limited time to deal with so many issues.
Martin: It’s just not realistic to expect the two parties — and everyone knows who they are for this issue–if they’re not reasonably together on something it’s not realistic to expect a two-thirds vote.
Leatherman: You’ll never get this vote.
Martin: We’ll never get this vote…
Leatherman: And if you don’t get two-thirds, what do we have, Senator?
Martin: We don’t have anything.
Both parties had reached a compromise with a committee of the Senate, but realtors put it on hold.Leatherman and Martin agreed that the issue cannot go unresolved.
(Senators Leatherman and Martin on need for Point of Sale Bill compromise Mp3 :31)
A Senate committee thought that it had reached a compromise on House bill 3272 last week, but Senator Thomas Alexander of Oconee reported Wednesday that the compromise had stalled. The bill gives businesses and homeowners a break from real estate taxes jumps that happen when a property is reassessed to be sold. The SC Association of Realtors says the tax shuts down real estate sales and hurts the states economy.
But local and county governments and school districts say this is an important source of revenue and that they may lose $44 million in taxes.
Senator Larry Martin of Pickens says that this bill is a stopgap measure, that would sunset out in 2014. Martin says that jobs are impacted when people walk away from real estate transactions because the property taxes are too high. Of concern to him and other legislators is the impact on commercial, not residential real estate.
“This is not an effort to take money away from local governments. This is not an effort to take money away from school districts. It’s an effort to help reinvigorate South Carolina’s real estate market in light of the real difficult times that we find ourselves in,” Martin says.
The South Carolina Association of Counties Attorney Robert Croom is fighting bill H.3272, but worked on the compromise with the realtors at the other side of the issue.
“Not only the counties, but the cities and the schools, and with several of the senators who were very generous with their time. We thought we had an agreement two weeks ago and the realtors came back that afternoon and they said, ‘No, no, no, we need to look at it again.” When they came back the next mornings the scope of what they wanted was larger as was the discount, or the size of the tax break. It was very discouraging. It’s one of the most frustrating negotiations I’ve had in my twenty years I’ve had here at the Statehouse,” says Croom.
Croom says a 15 percent tax cap when property is sold creates inequities and reduces important services: “If the people want services, somebody has to pay some tax. I’ve noticed in Charleston last week that they’ve shut the the library on Sundays, and that’s the current year. And to add on revenue losses there you’ll see significant reductions on some basic services.”
Croom of the association of counties says the point of sale tax increases the taxable value of property, and provides important revenues to make local and county government and schools function–all while state government and the economy have been tightening up.
“At a certain point we’re going to be in trouble on our bond ratings. They won’t lend us money to build the jail expansion. We’re not going to have the money if they gave us the jail to operate it. You’ve just got to have a certain amount of money. We have gone back and trimmed services, we’ve have had hiring freezes, we’ve had furloughs, ” says Croom.
The issue is still on the Senate floor and debate will resume on Tuesday.