SC homeowners could get $359 average property tax cut. Will Senate agree with plan?

South Carolina homeowners who are looking forward to a $359 property tax credit later this year may not want to count on that money just yet.

State Senate budget writers may be more cautious in how much the state spends of the hundreds of millions of dollars available for a property tax cut.

The House budget includes using $500 million in surplus sales tax revenue for a property tax cut. However, right now it would be one-time tax relief. House members hope to extend it to future years.

The statewide average property tax credit would be $359 per owner-occupied home, according to House budget documents.

But if enough money isn’t available to continue the reduction the following year, people who live in owner-occupied houses could think their property taxes have increased.

In 2006, the state sales tax increased to 6% from 5% in exchange for cutting property taxes on owner-occupied houses in half. Money in the property tax relief fund has accumulated to more than $600 million since 2020.

The $500 million would go to counties based on population and counties would then credit money to property taxpayers. The remaining $100 million would stay in the property tax fund as a way to smooth out the expense of the relief and in case sales tax revenue drops.

Senate Finance Committee Chairman Harvey Peeler said how the Senate handles the money still needs to be determined.

But senators who sit on the Senate Finance Committee indicated a concern over how much of a property tax cut to provide this year.

State Sen. Stephen Goldfinch, R-Georgetown, advocated for a possible smaller cut over several years to allow steadiness in homeowners’ property tax bills.

“I’m apprehensive about giving it and then yanking it right back from people next year,” Goldfinch said. “Not only the practical aspect of that of making people mad, but also the technical aspect of that and what happens when you know you blow up everybody’s escrow accounts, and then you short fund them the next year.”

Goldfinch suggested spreading the cut over five or six years, “so that banks, credit unions, escrow accounts could catch up, keep up and you would have sort of a steady incline and sort of soft landing for lack of a better term.”

State Sen. Mike Fanning, D-Fairfield, said determining how much is necessary to hold back in reserve to prevent a subsequent increase is a more appropriate approach.

“We don’t know that number yet,” Fanning said.

Fanning isn’t confident the money in the homestead exemption fund will be consistent in future years.

“So the worry is that we could be giving folks a false sense of that their property taxes are going down when in reality, they’re really kind of getting a one-time rebate for one year,” Fanning said.

House Ways and Means Chairman Bruce Bannister, R-Greenville, acknowledged that county treasurers have the concern that bills will look like they’re going up in the future.

“We thought it was better to get the maximum amount of money back to the taxpayers that we could this year,” Bannister said. “Dealing with those issues would probably be better if you had your own money back versus not.”

Bannister said working through concerns could take place when the House takes its second look at the budget later this legislative session or when the Senate and House finalize a budget in a conference committee.

“If the Senate comes up with a creative solution that will make that even out so that property tax relief is annual versus a one-time deal, I think we get a lot of support for that in the House,” Bannister said.