Tax Relief Principles

I am strongly committed to tax relief for the people of the Town of James Island.   There is a majority of Town Council who support this policy.

My basic principle is that the Town's tax relief policy should follow the LOST statute to the degree possible.

1. Tax relief should apply to all taxed property--houses, businesses, cars, boats and other personal and business property.

2. Tax relief should be in proportion to appraised property value.

3. All funds that the Town receives from the LOST Property Tax Credit Fund should be used for tax relief.

4. If too little tax relief is provided in one year, extra funds plus interest should be moved forward and used to provide tax relief the following year.

5. Tax relief should take the form of a credit on the tax bill, reducing the amount the taxpayer must pay the County Treasurer.

If the Town of James Island imposed a property tax millage sufficiently high that the amount each and every taxpayer owed the Town was at least as great as the required tax credit, then the Town would be legally obligated to follow these principles.   They are all provisions of the LOST statute.  The City of Folly Beach and the City of Charleston impose a millage sufficiently high that they must follow these rules.

If the Town of James Island imposed a tax millage just high enough that it must follow these rules, then homeowners and owners of agricultural land would have no additional tax liability.   It would probably be legal to provide credits for all taxpayers so that no one actually paid any additional municipal tax.   However, there would be no tax relief.   A Town tax credit would appear on the tax bills, but it would be a credit against a newly-imposed tax increase.    The only beneficial result would be to prevent any  legal challenge to the Town spending all of the money it receives from the LOST Property Tax Fund on the provision of public services.

I remain committed to true tax relief for the people of the Town, not sham tax relief against a newly imposed tax.

The most legally certain approach to providing tax relief is for the Town to collect its own property tax millage in place of the James Island Public Service District.   Because the millage charged by the JIPSD is sufficiently high, the Town would be legally obligated to follow the same rules as municipalities such as the City of Folly Beach and the City of Charleston.   The rules above would apply to the Town.

The residents and property owners of the Town could continue to receive services from the JIPSD, but the Town would need to pay the JIPSD for the services.    The authorization for a public service district to provide services to a municipality by contract is included in the statute governing annexations  by a municipality in a public service district.  

The Town of James Island can only follow this approach by an agreement with the James Island Public Service District.   The Town proposed such an agreement in December of 2013, providing plenty of time to allow for tax relief on the 2014 tax bills that came out in October.   The JIPSD rejected the Town's offer.  

The problem is that there are only two Commissioners who are willing to work with the Town.   The majority of Commissioners just echo Trent Kernodle's campaign slogan--mail the checks.

The Town has made two other proposals to the JIPSD to allow tax relief.   In my view, both are legally sound.

The first proposal was made in May of 2013, in time for tax relief on the 2013 tax bill.   This proposal was loosely modeled on the approach worked out by the Town's first Mayor, Joan Sooy,  the James Island Public Service District and the County Auditor in 1994.    A Town tax credit would appear on the tax bills.   The credit would reduce the amount taxpayers pay to the County Treasurer, and the County Treasurer would send less to the James Island PSD by the total amount of the credits.   The Town would pay that total amount to the JIPSD when the tax bills come due.

Under this plan, the Town would have no millage of its own.   The JIPSD would continue to set its own millage in the Town's tax district, and the Town would use money from the LOST Property Tax Credit fund to help pay its property owner's taxes to the JIPSD and thereby purchase public services from the JIPSD for their benefit.   The JIPSD would receive most of their tax monies from the County Treasurer as today, but part would be received directly from the Town in one check, or perhaps a few checks.

The third proposal, made by the Town in March of 2014, still in plenty of time for tax relief on the 2014 tax bill, was similar to the first.   However, the Town would deposit money with the County Treasurer.   The Auditor would calculate the tax credit and reduce the amount on the JIPSD line by the amount of the credit.    The Town's taxpayers would pay less to the County Treasurer.  As the tax bills are processed, funds would be moved from the Town's deposit to the JIPSD's account with the County Treasurer.  

The JIPSD would set its own millage in the Town's tax district.   The Town would have no millage of its own.  The County Treasurer would send payments to the JIPSD at the same times and in the same amounts as he would if there had been no Town tax credit.

Again, the Town would be using its funds from the LOST Property Tax Credit fund to help its property owners pay their taxes to the JIPSD and thereby pay for JIPSD services on their behalf.    The proposal is very similar to the first proposal, except that there would be no change in how the JIPSD receives its funds--it would continue to receive all of its tax revenue funds from the County Treasurer exactly as it does today.

Because the majority of James Island Commissioners have refused to work with the Town, and instead have demanded that the Town "mail the checks," the Town turned to Charleston County.   The Town proposed to Charleston County Council that the Town would deposit money with the County Treasurer as above, and the amount of the credit would be taken off the Charleston County general government operating line.    The Town's taxpayers would pay the County Treasurer less and as the bills are paid and processed, the funds would be shifted from the Town's deposit to that of the general County government's account.

The majority of County Council has said they would like to work with the Town.   However, they said that the County Attorney would have to determine if there is a legal risk to the County.  The County Attorney presumably reviewed the Town's proposal and expressed worry that the County could be sued and that it would be costly to defend.   We received that news in March of 2014.   The Town sought, and after some months obtained, opinions from the Attorney General's Office that the Town's proposals were legal.   

The Town's position has always been that it would be legal for the County or the JIPSD to come to an agreement with the Town.   We have never argued that either must come to an agreement with the Town.  Proving that it would be legal for the JIPSD to come to an agreement with the Town has not been a priority because there have not been enough JIPSD Commissioners who want to cooperate with the Town.  (The Kernodle supporters on the Commission just repeat--mail the checks.) 

After receiving the Attorney General Office's opinion, we shared it with the County Attorney and asked if he would now defer to that view.   He said that he would only advise County Council to go forward if there was a declaratory judgement.   The Town Attorney spoke with him on July 2 about arranging for a declaratory judgment.  It became clear that rather than seeking a declaratory judgement tailored narrowly to the Town's proposal, he would instead challenge the eligibility of the Town of James Island to receive any funds from the LOST Property Tax Fund.   He would argue that only municipalities with a property tax millage should receive funds and that the funds should be sent back and redistributed.   Further, he would insist that this be ajudicated by an appeals court, if not the South Carolina Supreme Court.    To me this seemed both excessive and expensive.  

On July 17, I met with the County Attorney and County Council Chairman Teddie Pryor along with Senator Thurmond and Councilman Qualey on how to move forward.  My goal was to discuss ways to reduce any legal risk to the County while limiting the scope or eliminating the need for a declaratory judgment.   My key argument is that the County should not be expected to defend a program that benefits the taxpayers of the Town.   It would be up to the Town to pay for any defense.   Further, I believe that the Town should be willing to guarantee with its full faith and credit that the County will get to keep and spend the money necessary to provide services to the residents of the Town.  

The Chairman told me that he was committed to helping the Town, if the legal obstacles could be met, but further meetings were postponed until after the election for Mayor on July 29.   The reason was obvious.  If Trent Kernodle won, the Town would be mailing the checks.  There would be no agreement with the County.  

While the Town has continued to pursue this approach, the post-election meeting has continued to be postponed.   Right now, it looks like we will be meeting sometime after the November 4 election.  I suppose that makes sense as well.   If Commissioner Brown Crouch is reelected and two other new Commissioners are elected who will cooperate with the Town, then there will be no need to work with the County.   If Commissioner Hollingsworth is reelected and just one of the three Commissioners committed to fighting the Town on this matter--Schurmieir, Engelman, or Kernodle-- are elected, then trying to work out an agreement with the County will be worth pursuing.

As the November election approached, Commissioners Hollingsworth and Welch both showed a new willingness to consider the Town's proposals.   I was asked to prepare mock-ups regarding what the bills would look like.   It wasn't too hard for me to do, and I think it was a useful exercise.   That Hollingsworth almost immediately became involved in a conspiracy to use this in a personal attack against me suggests that the overtures were less than sincere.   (In my opinion, Chairman Hollingsworth didn't plan any of this and just did whatever JIPSD Attorney Trent Kernodle told him to do, and read whatever was put in front of him.   It really did seem that at the October 13 meeting, he failed to put two plus two together and see that he was calling me a liar!)

Further, Commissioner Welch wrote several emails in mid-October that showed a complete reversal of his past position.   He said that if the Charleston County Attorney had no objection to the JIPSD working with the Town for a tax credit, then he and all the other Commissioners would support it.   Incredibly, he claimed that the Commissioners always had supported working with the Town on the tax credits.   It is as if I was supposed to forget the public meetings I attended where he and other Commissioners said the opposite!

Anyway, since March, the County Auditor has not been sure that he would be willing to implement the Town's proposal with the JIPSD, even if the JIPSD agreed.    His explanation was that he thought that the County Attorney would advise against it.   My view was that there was no need to worry about this until there was a majority of JIPSD Commissioners who would discuss anything other than "mail the checks."  

I did ask the County Attorney about it at the July 17 meeting, and he said that he would have no objection if the Town and the JIPSD came to an agreement.   He told Councilman Qualey the same thing on October 13 after we heard about Commissioner Welch's new willingness to cooperate.   Apparently, he confirmed this on a conference call on October 14.   The County Auditor was on that call, and so there is now no problem with the County Attorney, County Auditor, or County Treasurer if the JIPSD is willing to come to an agreement with the Town.   The County Auditor is working on the appropriate wording for the resolution for the Town and the resolution for the JIPSD Commissioners.   Tax credits are possible in 2015, if there is a majority of JIPSD Commissioners willing to vote for the resolution.

It is becoming clearer that it was all a dishonest campaign tactic.  "The Commissioners" could say that the JIPSD has always wanted to work with the Town, but that the County Attorney and County Auditor wouldn't let them because it was illegal.    When it turns out that the County Attorney and County Auditor will let them, the majority of JIPSD Commissioners no longer have any interest.  I think it is obvious that there was never any real interest.  

Please vote on November 4.