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H. 3714
STATUS INFORMATION
General Bill
Sponsors: Reps. Toole, Bingham, Huggins, Haley, E.H. Pitts, Clark, Frye, McLeod, Ballentine, Ott, Loftis, Bailey, Duncan, Harrison, Ceips, Merrill, M.A. Pitts, J.R. Smith, Tripp, Hagood, Bowers, Funderburk and Chellis
Document Path: l:\council\bills\ggs\22980htc05.doc
Companion/Similar bill(s): 484, 485, 3693
Introduced in the House on March 8, 2005
Currently residing in the House Committee on Ways and Means
Summary: School Equity and Real Property Tax Relief Act
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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3/8/2005 House Introduced and read first time HJ-3
3/8/2005 House Referred to Committee on Ways and Means HJ-5
3/15/2005 House Member(s) request name added as sponsor: Hagood
4/7/2005 House Member(s) request name added as sponsor: Bowers
4/27/2005 House Member(s) request name added as sponsor: Funderburk
5/3/2005 House Member(s) request name added as sponsor: Chellis
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO ENACT THE SCHOOL EQUITY AND REAL PROPERTY TAX RELIEF ACT BY AMENDING THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 11 TO CHAPTER 36, TITLE 12, SO AS TO IMPOSE AN ADDITIONAL STATE SALES, USE, AND CASUAL EXCISE TAX EQUAL TO TWO PERCENT ON AMOUNTS SUBJECT TO SALES, USE, AND CASUAL EXCISE TAX; BY AMENDING SECTION 11-11-150, AS AMENDED, RELATING TO THE TRUST FUND FOR TAX RELIEF, SO AS TO PROVIDE THAT REVENUES FROM THE TRUST FUND REIMBURSING SCHOOL DISTRICTS FOR THE RESIDENTIAL PROPERTY TAX EXEMPTION TO A SCHOOL DISTRICT MUST BE PAID MONTHLY IN AN AMOUNT THAT IS THE DISTRICT'S PROPORTIONATE SHARE OF THE REIMBURSEMENT BASED ON THE DISTRICT'S WEIGHTED PUPIL UNITS AS A PERCENTAGE OF STATEWIDE WEIGHTED PUPIL UNITS; BY ADDING SECTION 11-11-155 SO AS TO CREATE THE SCHOOL MILLAGE TAX EXEMPTION TRUST FUND (THE SCHOOL TRUST FUND) AND REQUIRE REVENUES OF THE ADDITIONAL SALES AND USE TAX TO BE CREDITED TO THIS FUND; BY ADDING SECTION 12-37-253 SO AS TO PROVIDE FOR A PROPERTY TAX EXEMPTION FOR ALL REAL PROPERTY FROM SCHOOL OPERATING MILLAGE NOT OTHERWISE EXEMPT, PROVIDE THE METHOD OF DETERMINING AND PHASING IN THE EXEMPTION, AND TO PROVIDE REIMBURSEMENTS TO SCHOOL DISTRICTS FOR THIS NEW EXEMPTION WITH A PAYMENT BASED ON WEIGHTED PUPIL UNITS; BY ADDING SECTION 12-37-253, SO AS TO EXEMPT FROM PROPERTY TAX AN AMOUNT OF THE FAIR MARKET OF REAL PROPERTY SUFFICIENT TO ELIMINATE INCREASES IN VALUE OF SUCH PROPERTY ATTRIBUTABLE TO COUNTYWIDE ASSESSMENT AND EQUALIZATION PLANS AND PROVIDE EXCEPTIONS; BY ADDING SECTION 59-20-42 SO AS TO PROVIDE THAT BEGINNING WITH FISCAL YEAR 2005-2006 EDUCATION FINANCE ACT APPROPRIATIONS MUST BE DISTRIBUTED TO A SCHOOL DISTRICT IN AN AMOUNT THAT IS THE DISTRICT'S PROPORTIONATE SHARE OF SUCH FUNDS BASED ON THE DISTRICT'S WEIGHTED PUPIL UNITS AS A PERCENTAGE OF STATEWIDE WEIGHTED PUPIL UNITS AS DETERMINED ANNUALLY PURSUANT TO THE EDUCATION FINANCE ACT; TO PROVIDE THAT FOR A PERIOD OF THREE YEARS BEGINNING JULY 1, 2005, AND ENDING JUNE 30, 2008, A LOCAL GOVERNING BODY UNDER PROVISIONS OF LAW AUTHORIZING THE ASSESSMENT OF TAXES AND FEES UNDER SPECIFIED CONDITIONS MAY INCREASE THE MILLAGE RATE IMPOSED FOR GENERAL OPERATING PURPOSES ABOVE THE RATE IMPOSED FOR SUCH PURPOSES FOR THE PRECEDING TAX YEAR ONLY BY A TWO-THIRDS VOTE OF THE MEMBERSHIP OF THE GOVERNING BODY, PRESENT OR NOT, RATHER THAN BY A POSITIVE MAJORITY VOTE; BY REPEALING ARTICLE 3, CHAPTER 10 OF TITLE 4, RELATING TO THE CAPITAL PROJECT SALES TAX ACT, AND CHAPTER 37 OF TITLE 4 RELATING TO OPTIONAL METHODS FOR FINANCING TRANSPORTATION FACILITIES INCLUDING LEVY OF ADDITIONAL SALES TAXES, AND TO PROVIDE THAT SALES TAXES FOR PROJECTS PREVIOUSLY AUTHORIZED UNDER THESE PROVISIONS SHALL CONTINUE UNTIL THEIR SCHEDULED TERMINATION DATE; TO REQUIRE A REFERENDUM IN COUNTIES IN WHICH THE LOCAL OPTION SALES TAX IS CURRENTLY IMPOSED FOR THE PURPOSE OF DETERMINING WHETHER TO RESCIND THE TAX AND BY PROVIDING THAT THIS ACT TAKES EFFECT JULY 1, 2005, AND APPLIES FOR PROPERTY TAX YEARS BEGINNING AFTER 2004.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 36, Title 12 of the 1976 Code is amended by adding:
Section 12-36-1110. An additional sales, use, and casual excise tax equal to two percent is imposed on amounts taxable pursuant to this chapter."
SECTION 2. Section 11-11-150 of the 1976 Code, as last amended by Act 387 of 2000, is further amended by adding:
"(H) Beginning July 1, 2005, and notwithstanding the provisions of Section 12-37-251(B) revenues from the Trust Fund for Tax Relief to be distributed to a school district as a reimbursement for the property tax exemption enumerated in item (1) of subsection (A) must be paid monthly in an amount that is the district's share of these revenues based on the district's weighted pupil units as a percentage of statewide weighted pupil units as determined annually pursuant to the Education Finance Act."
SECTION 3. Chapter 11, Title 11 of the 1976 Code is amended by adding:
"Section 11-11-155. (A) For each fiscal year, the revenue from the tax imposed pursuant to Section 12-36-1110 are automatically credited to a fund separate and distinct from the state general fund known as the 'School Tax Millage Exemption Trust Fund' (the School Trust Fund). The Board of Economic Advisors shall account for the School Trust Fund revenue separately from general fund revenues in reports to the Governor and the General Assembly. No portion of these revenues is credited to the Education Improvement Act (EIA) Fund.
(B) An unexpended balance in the School Trust Fund at the end of a fiscal year must remain in the School Trust Fund.
(C) Earnings on the School Trust Fund must be credited to the School Trust Fund.
(D) Nothing in this section prohibits appropriations by the General Assembly of additional revenues to the School Trust Fund."
SECTION 4. Chapter 37 of Title 12 of the 1976 Code is amended by adding:
"Section 12-37-253. (A) After the exemption allowed pursuant to Section 12-37-250 and Section 12-37-251, in the case of real property classified pursuant to Section 12-43-220(c), any remaining fair market value otherwise subject to tax and the fair market value of all other real property, however classified, is exempt from all school taxes except taxes:
(1) levied for bonded indebtedness for capital construction for schools;
(2) levied to make payments pursuant to a lease purchase agreement or other financing instrument for capital construction for schools; and
(3) levied for school operations sufficient to prevent any decline in the district's operating budget from state funds and property taxes from fiscal year 2004-2005 to 2005-2006. Millage for fiscal year 2005-2006 to prevent a reduction and fund teacher salaries may not be increased in subsequent years, and it must be decreased in subsequent years through millage adjustments by a dollar amount equal to one-half of the new revenue provided to the district from EFA distributions and the School Trust Fund for those years.
(B) School districts must be paid monthly from revenues credited to the School Trust Fund for a fiscal year for the exemption allowed by this section in an amount that is the district's proportionate share of School Trust Fund revenues based on the district's weighted pupil units as a percentage of statewide weighted pupil units as determined annually pursuant to the Education Finance Act. The School Trust Fund revenues that must be paid to school districts comprise the total of the revenue of the taxes imposed pursuant to Section 12-36-1110.
The General Assembly expresses its intent to fund annual growth in School Trust Fund revenues at least equal to the increase in the Consumer Price Index and state population each year.
(C) Notwithstanding any other provision of law, property exempted from property taxation in the manner provided in this section is considered taxable property for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State.
(D) The exemption provided by this section applies for property taxes imposed by any property taxing entity if the revenues of taxes imposed by the entity are used directly or indirectly for school operations."
SECTION 5. A. Article 3, Chapter 37, Title 12 of the 1976 Code is amended by adding:
"Section 12-37-223. (A) For purposes of this section, 'real property' means all real property, however classified for purposes of the property tax.
(B) There is exempted from property tax an amount of fair market value of real property located in the county sufficient to eliminate any increase in fair market value attributable to a countywide appraisal and equalization program conducted pursuant to Section 12-43-217 or any other manner in which the value of real property may be increased except as provided in item (1) of this subsection. An exemption allowed by this section does not apply to:
(1) fair market value attributable to real property or improvements to real property not previously taxed, such as new construction, and for renovation of existing structures; and
(2) real property transferred after the implementation of the values determined in the most recent countywide equalization program conducted pursuant to Section 12-43-217.
(C) Notwithstanding subsection (B)(2), the exemption provided in subsection (B) applies to real property which has been transferred in a transfer not subject to income tax pursuant to Sections 102 (Gifts and Inheritances), limited to transfers to a spouse or surviving spouse, 1033 (Conversions--Fire and Insurance Proceeds to Rebuild), 1041 (Transfers of Property Between Spouses or Incident to Divorce), 351 (Transfer to a Corporation Controlled by Transferor), 355 (Distribution by a Controlled Corporation), 368 (Corporate Reorganizations), or 721 (Nonrecognition of Gain or Loss on a Contribution to a Partnership) of the Internal Revenue Code, as defined in Section 12-6-40. The exemption provided in subsection (B) also continues to apply to real property which has been transferred if the transferor retains a life estate in the real property and the transferor continues to occupy the real property as his legal residence and to real property which has been transferred to a trust if the transferor is a life beneficiary of the trust and continues to occupy the real property as his legal residence.
(D) Once the fair market value of real property is first reduced by the exemption allowed in subsection (B), that reduced fair market value remains the fair market value of the property subject to property tax except as otherwise provided in subsection (B)(1) and (2), regardless of further increases in fair market value of that real property as determined in subsequent countywide appraisal and equalization programs or otherwise. When real property is transferred such that the real property is no longer eligible for the exemption provided for in subsection (B), the real property is subject to being taxed in the tax year following the transfer at its value, as determined under Section 12-37-930, at current fair market value as determined by the county assessor.
(E) The closing attorney involved in a real estate transfer shall provide the following notice to the buyer or buyers:
REAL PROPERTY TRANSFERRED AS A RESULT OF THIS TRANSACTION MAY BE SUBJECT TO PROPERTY TAXATION DURING THE NEXT TAX YEAR AT A VALUE THAT REFLECTS ITS FAIR MARKET VALUE."
B. Section 12-27-223A of the 1976 Code is repealed.
C. Notwithstanding the general effective date of this act, this section takes effect upon approval of this act by the Governor and applies for values resulting from countywide assessment and equalization programs or otherwise implemented after 2004.
SECTION 6. Chapter 20 of Title 59 of the 1976 Code is amended by adding:
"Section 59-20-42. (A) Notwithstanding any other provision of law, beginning with fiscal year 2005-2006, Education Finance Act appropriations and employer contributions must be distributed to a school district in an amount that is the district's proportionate share of such funds based on the district's weighted pupil units as a percentage of statewide weighted pupil units as determined annually pursuant to the Education Finance Act.
(B) It is the intent of the General Assembly that funding for weighted pupil unit growth for Education Finance Act purposes must be at least equal to the growth in the Consumer Price Index each year.
(C) Beginning July 1, 2005, a base student cost no longer shall be established annually by the General Assembly nor shall the Division of Research and Statistics calculate an annual inflation factor as required by Section 59-20-40(1)(b)."
SECTION 7. Notwithstanding the provisions of Section 6-1-320 of the 1976 Code, for a period of three years beginning July 1, 2005, and ending June 30, 2008, a local governing body pursuant to Article 3, Chapter 1 of Title 6, and if otherwise permitted to do so by law may increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only by a two-thirds vote of the membership of the governing body, present or not, rather than by a positive majority vote as defined therein. If there is a vacancy in the membership of the governing body, a two-thirds vote of the membership of the governing body as constituted on the date of the vote is required.
SECTION 8. (A) Article 3, Chapter 10 of Title 4 and Chapter 37 of Title 4 of the 1976 Code are repealed; provided, however, that the special sales taxes authorized before the effective date of this section to support capital projects under Article 3, Chapter 10 of Title 4 and the special sales taxes or tolls authorized before the effective date of this section to support transportation infrastructure projects under Chapter 37 of Title 4 shall continue until their termination date to provide financing or debt service funding for the projects authorized.
(B) In those counties in which is imposed on the effective date of this act the local sales and use tax allowed pursuant to Article 1, Chapter 10, Title 4 of the 1976 Code, there must be conducted a referendum held on the Tuesday following the first Monday in November following such effective date on rescinding the tax in the county as provided in Section 4-10-35 of the 1976 Code, without regard to the petition requirements provided therein. If a majority of the qualified electors voting in the referendum favor rescinding the tax, the tax is rescinded on a date determined by the governing body of the county not more than twenty-four months following the date the result of the referendum is certified to county council. The governing body of the county shall notify the Department of Revenue of the date the tax is rescinded.
SECTION 9. This act takes effect July 1, 2005, and for purposes of the tax exemption allowed applies for property tax years beginning after 2004.
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