The statewide property tax reforms of 2006, which exempted homeowners from most school taxes, were supposed to be paid for with a penny increase in the statewide sales tax. The result: A shortfall of more than $143 million over the past two years, which made the state’s budget problems worse.
Locally, the optional sales taxes that voters approved by referendum in two-thirds of South Carolina counties are used to offset town, city and county taxes.
The difficulty for local governments comes in projecting sales tax revenues up to a year ahead of time, and crediting those amounts to property tax bills. If they guess wrong, they come up short.
“That was our problem,” said Keith Bustraan, Charleston County deputy administrator and chief financial officer. “We set our revenue estimate and then began the long slide.”