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Businesses brace for schools' tax hike

Area business owners stand to bear the brunt of a tax increase from York County school districts, who, facing steep drops in state funding, say they have no where else to turn.

Superintendents from all four districts -- Clover, Fort Mill, Rock Hill and York -- said they plan to recommend their school boards vote to raise property taxes to the maximum allowed.

Because of a 3-year-old state law known as Act 388 exempting owner-occupied homes from paying property taxes that fund school operations, the lion's share of the local tax burden now falls on commercial and rental property owners. If all four districts increase to the max, those property owners can expect to pay an additional $6 for every $1,000 of taxable assessed value.

When funding cuts loom, schools, like businesses, can cut costs, said Ken Love, assistant superintendent for business services in the Clover district. But, Love added, "a business doesn't have requirements such as teacher-student ratios."

In some cases, Love said, the state doesn't pay schools enough to meet such mandates. For instance, a school may be required to have one teacher for every 15 students. To meet that, a school may need to hire two more teachers, but get only enough state money to hire one full-time and a part-time teacher. The school must make up the difference somehow.

"Businesses have the ability to adjust their prices up and down as the market demands," Love said. "We can't do that. We have one time a year to get it right."

Not all South Carolina school districts have the power to levy taxes. York County's districts are among several dozen that do.

Property tax rates are measured in mills. A mill is worth $1 per $1,000 of a property's assessed value. York County's school districts can each raise taxes up to six mills.

'An unfair situation'

Act 388, billed as tax relief for homeowners, sailed to approval in 2006. The thinking was homeowners, many of whom saw school taxes as the largest chunk of their tax bill, should no longer have to bear that burden. The money schools lost would be replaced by bumping up the state sales tax by a penny.

Then the state went into a recession. Consumer spending stalled; sales tax revenues dropped.

Fast-growing school districts, like York County's, say the law hit them with a double whammy. Sales tax proceeds are split among districts based on the state's average population growth rate. Because York County's growth rate is several times higher than that, school officials say they won't get enough to keep up with new students.

The question, said Ellen Saltzman, a research associate with the Strom Thurmond Institute of Government & Public Affairs, is, "Where can schools get money for operating now?"

Saltzman predicts tax rates over time will continue to jump to make up for lost revenue.

None of York County's school districts has voted to raise taxes yet. All are in the process of scheduling public hearings on next school year's budget.

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