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Sponsors: Senators Hayes, Land, Courson, Matthews, Grooms and Richardson
Document Path: l:\council\bills\bbm\9726htc07.doc
Companion/Similar bill(s): 367, 3372, 3422, 3627
Introduced in the Senate on January 31, 2007
Introduced in the House on February 20, 2007
Last Amended on February 14, 2007
Currently residing in the House Committee on Ways and Means
Summary: Homestead Exemption Fund
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 1/31/2007 Senate Introduced and read first time SJ-10 1/31/2007 Senate Referred to Committee on Finance SJ-10 2/7/2007 Senate Committee report: Favorable with amendment Finance SJ-33 2/8/2007 Scrivener's error corrected 2/14/2007 Senate Amended SJ-36 2/14/2007 Senate Read second time SJ-36 2/15/2007 Senate Read third time and sent to House SJ-19 2/15/2007 Scrivener's error corrected 2/20/2007 House Introduced and read first time HJ-7 2/20/2007 House Referred to Committee on Ways and Means HJ-8
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VERSIONS OF THIS BILL
Indicates Matter Stricken
Indicates New Matter
COMMITTEE AMENDMENT ADOPTED
February 14, 2007
Introduced by Senators Hayes, Land, Courson, Matthews, Grooms and Richardson
S. Printed 2/14/07--S. [SEC 2/15/07 2:11 PM]
Read the first time January 31, 2007.
TO AMEND SECTION 6-1-50, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO REPORTING BY COUNTIES AND MUNICIPALITIES TO THE OFFICE OF RESEARCH AND STATISTICS OF THE STATE BUDGET AND CONTROL BOARD, SO AS TO CHANGE THE REPORTING DATE; TO AMEND SECTION 6-1-320, AS AMENDED, RELATING TO THE LIMIT ON PROPERTY TAX MILLAGE INCREASES, SO AS TO PROVIDE THAT A REDUCTION IN POPULATION AND A DECLINE IN THE CONSUMER PRICE INDEX DOES NOT DECREASE THE APPLICABLE LIMIT; TO AMEND SECTIONS 11-11-155 AND 11-11-156, RELATING TO THE HOMESTEAD EXEMPTION FUND AND THE MANNER IN WHICH THE SCHOOL DISTRICTS OF THE STATE RECEIVE REVENUES FROM THE HOMESTEAD EXEMPTION FUND, SO AS TO CLARIFY THE METHOD OF DETERMINING AND CALCULATING THESE PAYMENTS, PROVIDING THE SCHEDULE OF THE PAYMENTS TO SCHOOL DISTRICTS, SPECIFYING THE SOURCE OF THE TWO AND ONE-HALF MILLION DOLLAR MINIMUM PAYMENT TO A COUNTY FOR SCHOOL DISTRICTS IN THE COUNTY, AND SPECIFYING WHEN A REMAINING BALANCE IN THE HOMESTEAD EXEMPTION FUND IS REMITTED TO COUNTIES FOR PURPOSES OF THE COUNTY OPERATING MILLAGE PROPERTY TAX CREDIT FOR OWNER-OCCUPIED RESIDENTIAL PROPERTY; TO AMEND SECTION 12-37-670, AS AMENDED, RELATING TO THE OPTIONAL ACCELERATION OF LISTING REAL PROPERTY FOR PROPERTY TAX, SO AS TO ALLOW A COUNTY ORDINANCE IMPLEMENTING THE ACCELERATION TO USE A MONTHLY, QUARTERLY, OR SEMI-ANNUAL SCHEDULE, PROVIDE FOR THE ASSESSOR TO DO THESE LISTINGS, ELIMINATE PROVISIONS PROVIDING FOR PAYMENT IN THE SUCCEEDING TAX YEAR, AND PROVIDE THAT ADDITIONAL TAX IS DUE ON THE VALUE OF THE IMPROVEMENTS LISTED WITHOUT REGARD TO A TAX RECEIPT ISSUED EARLIER FOR PAYMENT ON THE UNIMPROVED PROPERTY; TO AMEND SECTIONS 12-37-3130, 12-37-3140, AND 12-37-3150, RELATING TO DEFINITIONS, VALUATION, AND ASSESSABLE TRANSFER OF INTEREST, FOR PURPOSES OF THE SOUTH CAROLINA REAL PROPERTY VALUATION REFORM ACT, SO AS TO DELETE REFERENCES TO "BENEFICIAL USE", TO REVISE THE DEFINITION OF "CONVEYANCE", AND PROVIDE THAT TRANSFERS OCCUR WHEN INSTRUMENTS ARE EXECUTED WITHOUT REFERENCE TO THE DATE OF RECORDING AND TO PROVIDE THAT FAILURE TO RECORD GIVES RISE TO NO INFERENCE OR TO WHETHER OR NOT A TRANSFER HAS OCCURRED, TO CLARIFY THE DATE AND PROPERTY TAX YEAR FOR WHICH REVISED VALUES APPLY, DELETE UNIT VALUATION REAL PROPERTY FROM THE APPLICABLE LIMITS, AND PROVIDE THAT THE TRANSFER OF AN INTEREST IN A TIMESHARE UNIT DOES NOT RESULT IN AN ASSESSABLE TRANSFER OF INTEREST; AND TO AMEND SECTION 12-60-2510, AS AMENDED, RELATING TO PROPERTY TAX APPEALS, SO AS TO PROVIDE THAT IN NONREASSESSMENT YEARS, AN APPEAL MADE BEFORE THE FIRST PENALTY DATE FOR TAXES FOR THE YEAR APPLIES FOR THAT YEAR AND AN APPEAL FILED ON OR AFTER THAT DATE APPLIES FOR THE NEXT YEAR.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. A. Section 6-1-50, as last amended by Act 388 of 2006, is further amended to read:
"Section 6-1-50. Counties and municipalities receiving revenues from state aid, currently known as Aid to Subdivisions, shall submit annually to the State Budget and Control Board, Office of Research and Statistics, Economic Research Section, a financial report detailing their sources of revenue, expenditures by category, indebtedness, and other information as the State Budget and Control Board, Office of Research and Statistics, Economic Research Section, requires. The State Budget and Control Board, Office of Research and Statistics, Economic Research Section, shall determine the content and format of the annual financial report. The financial report for the most recently completed fiscal year must be submitted to the State Budget and Control Board, Office of Research and Statistics, Economic Research Section, by
November January fifteenth of each year. If an entity fails to file the financial report by November January fifteenth, then the chief administrative officer of the entity shall be notified in writing that the entity has thirty days to comply with the requirements of this section. The Director of the Office of Research and Statistics may, for good cause, grant a local entity an extension of time to file the annual financial report. Notification by the Director of the Office of Research and Statistics to the Comptroller General that an entity has failed to file the annual financial report thirty days after written notification to the chief administrative officer of the entity must result in the withholding of ten percent of subsequent payments of state aid to the entity until the report is filed. The State Budget and Control Board, Office of Research and Statistics, Economic Research Section, is responsible for collecting, maintaining, and compiling the financial data provided by counties and municipalities in the annual financial report required by this section."
B. Notwithstanding the general effective date provided in this act, this section takes effect upon approval of this act by the Governor.
SECTION 2. Section 6-1-320(A) of the 1976 Code, as last amended by Act 388 of 2006, is further amended to read:
"(A) Notwithstanding Section 12-37-251(E), a local governing body may increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only to the extent of the increase in the average of the twelve monthly consumer price
indexes indices for the most recent twelve-month period consisting of January through December of the preceding calendar year, plus, beginning in 2007, the percentage increase in the previous year in the population of the entity as determined by the Office of Research and Statistics of the State Budget and Control Board. If the average of the twelve monthly consumer price indices experiences a negative percentage, the average is deemed to be zero. If an entity experiences a reduction in population, the percentage change in population is deemed to be zero. However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section 12-37-251(E), must be used in lieu of the previous year's millage rate."
SECTION 3. A.Section 11-11-155(C) of the 1976 Code, as added by Act 388 of 2006, is amended to read:
"(C) Subject to the provisions of Section 11-11-156(C), an unexpended balance in the Homestead Exemption Fund at the end of a fiscal year must remain in the Homestead Exemption Fund."
B. Section 11-11-156 of the 1976 Code, as added by Act 388 of 2006, is amended to read:
"Section 11-11-156. (A)(1) Beginning with fiscal year 2007-2008, school districts of this State must be reimbursed from the Homestead Exemption Fund in the manner provided in this subsection.
The Comptroller General shall pay these reimbursements upon application of the school district and the The reimbursements reimbursement due a school district for fiscal year 2007-2008 and thereafter shall be equal to the amount estimated to be collected or reimbursed in fiscal year 2007-2008 by the district from school operating millage imposed on owner-occupied residential property therein consists of three tiers. The tier one reimbursement is an amount equal to the amount received by the district pursuant to the provisions of Section 12-37-251 as those provisions applied for fiscal year 2006-2007. The tier one reimbursement is fixed at the fiscal year 2006-2007 amount and continues into succeeding fiscal years at this fixed amount. The tier two reimbursement is the amount to be received by the district pursuant to the provisions of Section 12-37-270 for fiscal year 2006-2007 for the school operating millage portion of the reimbursement for the homestead exemption allowed pursuant to Section 12-37-250. The tier two reimbursement is fixed at this fiscal year 2006-2007 amount and continues into succeeding fiscal years at this fixed amount. The tier three reimbursement is derived from the revenue of the tax imposed pursuant to Article 11, Chapter 36 of Title 12, and for fiscal year 2007-2008, consists of an amount equal dollar for dollar to the revenue that would be collected by the district from property tax for school operating purposes imposed by the district on owner-occupied residential property for that fiscal year as if no reimbursed exemptions applied, plus an amount that a district may have received in its fiscal year 2006-2007 reimbursements pursuant to Section 12-37-251 in excess of the computed amount of that exemption from school operating millage for that year, reduced by the total of the district's tier one and tier two reimbursements.
(2) Beginning in fiscal year 2008-2009 a school district shall receive in reimbursements the total of what it received in fiscal year 2007-2008 plus the tier three reimbursement increases provided for in item (3). The tier three reimbursement increases of the several school districts as provided in item (3) for any year
shall must be aggregated and the reimbursement increase a particular school district shall receive for that year shall must be equal to an amount that is the school 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. For purposes of the reimbursement increases school districts receive under this subsection based on weighted pupil units determined pursuant to the Education Finance Act, an additional add-on weighting for students in poverty of 0.20 shall must be included in the weightings provided in Section 59-20-40(1)(c) of the 1976 Code. The weighting for poverty shall provide additional revenues for students in kindergarten through grade twelve who qualify for Medicaid or who qualify for reduced or free lunches, or both. Revenues generated by this weighting must be used by districts and schools to provide services and research-based strategies for addressing academic or health needs of these students to ensure their future academic success, to provide summer school, reduced class size, after school programs, extended day, instructional materials, or any other research-based educational strategy to improve student academic performance.
(3)(a) Beginning with the fiscal year 2008-2009 reimbursements, these tier three reimbursements must be increased on an annual basis by an inflation factor equal to the percentage increase in the previous year of the Consumer Price Index, Southeast Region, as published by the United States Department of Labor, Bureau of Labor Statistics plus the percentage increase in the previous year in the population of the State as determined by the Office of Research and Statistics of the State Budget and Control Board. Distribution of these reimbursement increases
shall must be as provided in this subsection.
(b) If the total increase provided pursuant to subitem (a) of this item is less than four percent, then to the extent revenues are available in the Homestead Exemption Fund, the CPI/population increase provided pursuant to subitem (a) of this item is further increased, not to exceed a total of four percent.
(4) The percentage of population growth in any year for any school district entitled to reimbursements from the Homestead Exemption Fund
shall must be based on estimates for such growth in the county wherein the school district is located as determined by the Office of Research and Statistics of the State Budget and Control Board. Where the school district encompasses areas in more than one county, the population growth in that entity shall must be the average of the growth in each county weighted to reflect the existing population of the school district in that county as compared to the existing population of the school district as a whole.
Upon the beginning of reimbursements for a particular year, the reimbursements must be paid to a school district on or after January first of that year. (a) No later than December thirty-first of each year, the Office of Research and Statistics of the State Budget and Control Board shall provide each school district with a preliminary estimate of the district's reimbursements from the Homestead Exemption Fund for the fiscal year beginning the following July first. A final estimate must be provided to each district by February fifteenth. The February fifteenth forecast may be adjusted if the Office of Research and Statistics determines that changing conditions have affected the forecast.
(b) The Department of Revenue shall pay the reimbursements provided pursuant to this subsection to the county treasurer for the credit of each school district in the county. The reimbursement must be paid on the application of the county treasurer according to the following schedule:
(i) ninety percent of the tier one reimbursement must be paid in the last quarter of the calendar year no later than December first. The balance of the tier one reimbursement must be paid in the last quarter of the fiscal year that ends June thirtieth following the first tier one reimbursement date;
(ii) tier two reimbursements must be paid on the same schedule as the second tier one reimbursement;
(iii) tier three reimbursements must be paid in nine equal monthly installments based on one-tenth of the Office of Research and Statistics estimate, beginning not later than October fifteenth. A final adjustment balance payment must be made before the closing of the state's books for the fiscal year.
(6) To the extent revenues in the Homestead Exemption Fund are insufficient to pay all reimbursements to a school district required by this subsection (A) and subsection (B), the difference must be paid from the state general fund. However, no general fund revenues may be used to achieve the distribution provided pursuant to item (3)(b) of this subsection.
(7) Operating millage levied in a county for alternative schools, career and technology centers, and county boards of education whether or not levied countywide or on a school district by school district basis in a county also is considered school operating millage to which the reimbursements provided for in this section apply.
(8) Reimbursements to a school district under this subsection
shall must be considered in the computation of the required Education Improvement Act maintenance of local effort.
(B)(1) After the required reimbursements to school districts in a county have been made from the Homestead Exemption Fund for any year pursuant to subsection (A), a county, if the districts
therein in that county have not together received a total of at least two million five hundred thousand dollars in tier three reimbursements, the county must receive an additional disbursement from the Homestead Exemption Fund to bring the total reimbursements to the districts in that county to at least two million five hundred thousand dollars. This additional disbursement shall must be paid to the county for disbursement to the school districts located within that county. These distributions under this subsection to any district in the county shall must be equal to the one hundred thirty-five day average daily membership of the district divided by the total average daily membership of all students in the districts in the county times the required amount of funds to bring the total reimbursements to the school districts in that county to at least two million five hundred thousand dollars.
(2) If a school district encompasses more than one county, the one hundred thirty-five day average daily membership of the students from that county attending schools of the district must be used to compute the distributions required by this subsection.
(3) The distributions to a county and then to a school district under this subsection
shall must be considered to be outside of the Education Finance Act and shall must not be considered when computing the maintenance of local effort required of that district under the Education Improvement Act.
The When determined, any balance in the Homestead Exemption Fund remaining at the end of a fiscal year after the payments to school districts and counties pursuant to subsections (A) and (B) of this section must be segregated within the Homestead Exemption Trust Fund and remitted in the next fiscal year to counties in the proportion that the population of the county is to the total population of the State. Population data must be as determined in the decennial United States Census and the most recent update to that data as determined by the Office of Research and Statistics of the State Budget and Control Board. Revenues received by the county must be used to provide a property tax credit against the property tax liability for county operations on owner-occupied residential property classified for property tax purposes pursuant to Section 12-43-220(c). The credit is an amount determined by dividing the total estimated revenues credited to the county during the applicable fiscal year by the number of parcels in the county eligible for the credit. Credit that exceeds the tax due on a parcel must be reallocated in a uniform amount to remaining parcels with a property tax liability for county operations. The distributions under this subsection are not an obligation of the state general fund if sufficient funds are not available to make such distributions from the Homestead Exemption Fund.
(D) Notwithstanding any other provision of this section, the reimbursements provided pursuant to this section for the property tax exemption allowed by Section 12-37-220(B)(47) must include full payment to each taxing entity for the incremental property tax that, in the absence of such exemption, would otherwise be payable to such taxing entity with respect to owner-occupied residential real property located in a redevelopment project area pursuant to the tax increment financing law for cities, counties, or redevelopment authorities. Such payment for incremental property taxes shall be calculated in accordance with the applicable tax increment financing law and shall be based on the assessed value of, and the school operating millage rate otherwise applicable to, the owner-occupied residential property in question."
SECTION 4. Section 12-37-670 of the 1976 Code, as amended by Act 388 of 2006, is further amended to read:
"Section 12-37-670. (A)
Each owner of land on which any new structures have been erected which shall not have been appraised for taxation shall list them for taxation with the county auditor of the county in which they may be situate on or before the first day of March next after they shall become subject to taxation. No new structure shall must be listed or assessed for property tax until it is completed and fit for the use for which it is intended.
Notwithstanding the provisions of subsection (A), a A county governing body may by ordinance may provide that an owner of land on which a new structure has been erected and that has not been appraised for taxation shall list the new structure previously untaxed improvements to real property must be listed for taxation with the county auditor assessor of the county in which it is located by the first day of the next month, calendar quarter, or calendar half-year, as the ordinance specifies, after a certificate of occupancy is issued for the structure. A new structure must not be listed or assessed until it is completed and fit for the use for which it is intended, as evidenced by the issuance of the certificate of occupancy or the structure actually is occupied if no certificate is issued.
(2) When an ordinance allowed pursuant to this subsection is enacted, additional property tax attributable to improvements listed with the county
auditor assessor accrues beginning on the listing date and is due on or before June thirtieth is due for the period from July first to December thirty-first for that property year, and payable when taxes are due on the property for that property tax year. Additional property tax attributable to improvements listed with the county auditor after June thirtieth of the property tax year is due and payable when taxes are due on the property for the next property tax year. This additional tax is due and payable without regard to any tax receipt issued for that parcel for the tax year that does not reflect the value of the improvements.
(3) If a county governing body elects by ordinance to impose the provisions of this subsection, this election is also binding on all municipalities within the county imposing ad valorem property taxes."
SECTION 5. A. Items (4), (5), and (7) of Section 12-37-3130 of the 1976 Code, as added by Act 388 of 2006, are amended to read:
"(4) 'Assessable transfer of interest' means a transfer of an existing interest in real property that subjects the real property to appraisal. For purposes of this definition, an existing interest in real property includes life estate interests
and the beneficial use of the property when the fair market value of that beneficial use is substantially equal to the fair market value of the real property or the fee interest.
'Beneficial use' means the right to possession, use, and enjoyment of property, limited only by encumbrances, easements, and restrictions of record. RESERVED
(7) 'Conveyance' means the date of the
instrument of record transfer of an assessable transfer of interest in real property is recorded by the Clerk of Court or Register of Deeds in the county where the real property is located. Failure to record legal instruments evidencing a transfer of interest gives rise to no inference as to whether or not an assessable transfer of interest has occurred."
B. Section 12-37-3140 of the 1976 Code, as added by Act 388 of 2006, is amended to read:
"Section 12-37-3140. (A)(1) For property tax years beginning after 2006, the fair market value of real property is its fair market value applicable for the later of:
(a) the base year, as defined in subsection (C) of this section;
when December thirty-first of the year in which an assessable transfer of interest has occurred;
(c) as determined on appeal; or
(d) as it may be adjusted as determined in a countywide reassessment program conducted pursuant to Section 12-43-217, but limited to increases in such value as provided in subsection (B) of this section.
(2) To the fair market value of real property as determined at the time provided in item (1) of this subsection, there must be added the fair market value of subsequent improvements and additions to the property.
(B) Any increase in the fair market value of real property attributable to the periodic countywide appraisal and equalization program implemented pursuant to Section 12-43-217 is limited to fifteen percent within a five-year period to the otherwise applicable fair market value. However, this limit does not apply to the fair market value of additions or improvements to real property in the year those additions or improvements are first subject to property tax, nor do they apply to the fair market value of real property when an assessable transfer of interest occurred in the year that the transfer value is first subject to tax.
(C) For purposes of determining a 'base year' fair market value pursuant to this section, the fair market value of real property is its appraised value applicable for property tax year 2007.
(D) Real property valued by the unit valuation concept is excluded from the limits provided pursuant to subsection (B) of this section.
(E) Value attributable to additions and improvements, and changes in value resulting from assessable transfers of interest occurring in a property tax year are first subject to property tax in the following tax year except as provided pursuant to Section 12-37-670(B)."
C. 1. Section 12-37-3150(A) of the 1976 Code, as added by Act 388 of 2006, is amended by adding a new paragraph at the end to read:
"An assessable transfer of interest resulting in the appraisal required pursuant to this article occurs at the time of execution of the instruments directly resulting in the transfer of interest and without regard as to whether or not the applicable instruments are recorded. Failure to record instruments resulting in a transfer of interest gives rise to no inference as to whether or not an assessable transfer of interest has occurred."
2. Items (7) and (8) of Section 12-37-3150(B) of the 1976 Code, as added by Act 388 of 2006, are amended to read:
"(7) a transfer of real property or other ownership interests among members of an affiliated group. As used in this item, 'affiliated group' is as defined in Section 1504 of the Internal Revenue Code as defined in Section 12-6-40. Upon request of the applicable property tax assessor, a corporation shall furnish proof within forty-five days that a transfer meets the requirements of this item. A corporation that fails to comply with this request is subject to a civil penalty as provided in Section 12-37-3160(B);
(8) a transfer of real property or other ownership interests among corporations, partnerships, limited liability companies, limited liability partnerships, or other legal entities if the entities involved are commonly controlled. Upon request by the applicable property tax assessor, a corporation, partnership, limited liability company, limited liability partnership, or other legal entity shall furnish proof within forty-five days that a transfer meets the requirements of this item. A corporation, partnership, limited liability company, limited liability partnership, or other legal entity that fails to comply with this request is subject to a civil penalty as provided in Section 12-37-3160(B); or
(9) a transfer of an interest in a timeshare unit by deed or lease."
D. Notwithstanding the general effective date of this act this section takes effect upon ratification of an amendment to the Constitution of this State proposed pursuant to Joint Resolution 402 of 2006 and applies for property tax years beginning after 2006.
SECTION 6. Section 12-60-2510(4) of the 1976 Code, as last amended by Act 388 of 2006, is further amended to read:
"(4) In years when there is no notice of property tax assessment, the property taxpayer
must, within ninety days after the tax notice is mailed to the taxpayer, give the assessor written notice of objection to one or more of the following: may appeal the fair market value, the special use value, the assessment ratio, and the property tax assessment of a parcel of property at any time. The appeal must be submitted in writing to the assessor. An appeal submitted before the first penalty date applies for the property tax year for which that penalty would apply. An appeal submitted on or after the first penalty date applies for the succeeding property tax year. The failure to serve written notice of objection within ninety days after the tax notice is mailed to the taxpayer is a waiver of the taxpayer's right of protest for that tax year, and the assessor may not review any request filed after the ninetieth day that the tax notice was mailed to the taxpayer."
SECTION 7. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 8. Except where otherwise provided, this act takes effect upon approval by the Governor.
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