Shift hidden in revaluation will raise taxes for some

Published 12:39 am Friday, May 23, 2008

By Staff
Landowners to carry ‘fair’ burden for first time in eight years
Staff Writer
Beaufort County commissioners have expressed a commitment to not raising the county’s tax rate when setting the budget for the upcoming fiscal year.
They’ve made a revenue-neutral tax rate a goal for the next several years.
But in 2010, when the county’s latest revaluation goes into effect, most property owners will see their tax bills increase, and it will not be the commissioners fault. It’s a product of the “hidden shift” caused by the eight-year revaluation process.
Owners of real property in Beaufort County have, since 2002 when the last revaluation was done, been paying taxes based on the value of their properties in 2002. On the other hand, owners of automobiles and manufacturing equipment and the like have been paying taxes on the annually reappraised fair-market values of those possessions. As the eight-year revaluation cycle progresses, owners of automobiles and manufacturing equipment shoulder a greater proportion of the county’s total tax burden.
In the eighth year, the General Assembly mandates that a revaluation be conducted to “make the world right again from the perspective of paying your fair share,” according to Beaufort County Manager Paul Spruill, who coined the term “hidden shift.”
The increased revenue from the landowner group is so significant that when the county drops the tax rate to a revenue-neutral rate, the percentage of the county’s property-tax revenue from that group will rise from 67 percent in the year prior to revaluation to 75 percent in the year after, according to Spruill.
At the same time, the proportion of the tax burden shouldered by owners of cars and manufacturing equipment will drop from about 33 percent in the year prior to revaluation to 25 percent in the year after, he said.
Using “hypothetical but realistic” figures, Spruill said the county’s $4 billion real-property tax base could increase as much as 50 percent — to $5.37 billion — as a result of revaluation. That would correlate to a 15 percent increase in tax bills for landowners without the county raising the tax rate, according to Spruill. The county would experience only a 3-percent natural-growth increase in revenue from the year prior to revaluation to the year after — an increase from $22.56 million to $23.29 million, he said.
That shift can be explained by examining two hypothetical neighbors living in Beaufort County. One is a homeowner who has no car. His neighbor is a renter that owns a landscaping business. She owns a car, a boat, a large lawn mower and an all-terrain vehicle.
For six years, the homeowner has paid taxes on the 2002 value of his house while his neighbor has paid taxes based on the annual fair-market value of her boat, car, lawn mower and ATV. In year seven, Spruill estimated the homeowner would be paying about 70 percent of his “fair-market” tax burden while the renter has all along been paying 100 percent of her “fair-market” tax burden.