The Town's New Proposal for Tax Relief

It is that time of year again...

Time to find a way to provide tax relief to the people of James Island.

I have asked Town Council to approve the introduction of a 35.1 mill property tax for the Town to fund a $2 million annual payment to the James Island Public Service District for fire protection.

If the Town introduces a property tax, then we must provide a Local Option Sales Tax (LOST) property tax credit.   I am proposing a $2 million tax credit for next year.    That is based on how much we are projecting that the Town will have received from the LOST Property Tax Fund through the end of the current fiscal year.    It will be just enough to zero-out the amount of Town tax on the property tax bills next year.

But there is a catch.

I am asking the JIPSD Commissioners to reduce the amount of the operating millage they collect in the Town by 35.1 mills.   They currently collect 51.1 mills, so that would reduce the amount of operating millage they collect in the Town to 16 mills.   The Town would agree to pay the difference directly to them, which would be approximately $2 million per year.  That would be the Town's payment for fire service.  The 16 mills the JIPSD would continue to collect in the Town would pay for solid waste collection and other services.    The JIPSD operating millage and Town operating millage would add up to 51.1 mills--what the JIPSD currently collects.  My plan would leave the total millage in the Town unchanged.

If the JIPSD Commissioners agree to reduce their millage, the combined result of the plan would be a 31% tax cut for homeowners on the County property tax bills going out in the fall.   The tax reduction on cars, rental property, and businesses, would be 16%.   The tax cut on boats and other personal property would be 15%.     The tax reduction would be from the Town's LOST property tax credit.

If the Commissioners don't agree to reduce the amount of millage they collect in the Town, then they will be continuing to fund fire service in the Town by directly collecting taxes from Town property owners.   The Town won't be paying them any of the budgeted money.   If that happens, the Town will just keep the money and try again next year.   There wouldn't be any tax relief, but because any Town millage would be zeroed out by the Town's LOST property tax credit, no one will pay any additional property tax.

I didn't just make up 35.1 mills.   That is what the JIPSD charges both the City of Folly Beach and the City of Charleston for fire protection in the areas those two municipalities annexed in the JIPSD.    I am asking that the JIPSD come to a similar arrangement with the Town of James Island.

The JIPSD has changed the amount it charges the other municipalities for fire service, most recently in 2013, raising it from 34.1 mills to 35.1 mills at the same time the JIPSD increased the millage it charges in the Town from 50.1 mills to 51.1 mills.   If the cost of fire service should increase and the Commissioners increased their millage again, then the Town would have to pay more to the JIPSD.   If that occurs, then the Town will have to raise the millage it collects to pay the increased amount to the JIPSD.   Since without this agreement, the residents of the Town would pay more anyway, I think that it is a fair approach.

The amount of the Town's tax credit in 2016 and future years will be approximately $840,000.   The resulting tax cut for a homeowner will be approximately 16%.   For businesses, rentals, and cars, it will be 5%.   For boats and other personal property, it will be 3%.   This is due to the legally-required formula for LOST property tax credits.   The LOST tax credits must be in proportion to appraised property values.  Homeowners have a low assessment ratio of 4% and already a large tax credit to fund the operating costs of schools.    This makes the percentage tax cut due to the LOST tax credit extra large in proportion to the taxes homeowners pay.   Personal property, like boats, has a very high assessment ratio of 10.5 percent, which makes the percent tax cut extra small.

In December of 2013, the Town proposed to the JIPSD that it stop collecting property tax in the Town and have the Town directly pay the JIPSD for all services.   That approach would have required that the Town introduce a 51.1 mill property tax.   This new proposal is similar except that the JIPSD would continue to directly collect some property tax in the Town to fund solid waste collection and other services.

In March of 2014, the Town proposed that the JIPSD allow the Town to put its tax credit on the JIPSD's line on the County tax bill.   I again proposed this in August of 2014.  That proposal remains on the table.   If the JIPSD Commissioners agree, then the introduction of a Town property tax can be postponed indefinitely.   With that proposal, the JIPSD operating millage would appear on the tax bill as 51.1 mills, but in the Town, the amount collected by the JIPSD would be reduced by the amount of the Town's tax credit.  The Town would pay the difference to the JIPSD, probably by depositing the funds with the County Treasurer.

The Town made a similar proposal to Charleston County Council last year.   The County attorney was opposed.   With County Councilman Joe Qualey deferring to the County Attorney on the issue, I have decided that there is no point in pursuing an agreement with Charleston County Council.   Fortunately, the County attorney has no objection to the Town putting a tax credit on the JIPSD line on the tax bill.   Councilman Qualey reported on the County Attorney's view at the JIPSD meeting last fall.

It is my understanding that the legal concern regarding a Town of James Island tax credit against the Charleston County general government's line is that taxpayers in other municipalities, such as Kiawah Island or Seabrook, might sue the County Auditor demanding a similar municipal tax credit.   This would put the County in an awkward position, taking sides in a conflict between those municipalities and their taxpayers.   This is not a problem with an agreement between the Town of James Island and the JIPSD.   There are no other municipalities within the JIPSD and those in the areas of the JIPSD annexed by the City of Folly Beach and the City of Charleston already receive a LOST property tax credit on their tax bills.

However, if the JIPSD Commissioners again won't agree to allow the Town to provide a tax credit on the JIPSD line on the tax bill, then the best alternative is for the Town to have its own line on the tax bill and its own property tax.   In order for the tax credits to provide tax relief to the Town's taxpayers, the Town needs to use its funds to directly pay the JIPSD for services.   In order for the tax credits to provide tax relief to the Town's taxpayers, the JIPSD Commissioners must reduce the millage they collect in the Town.

The Town is suggesting two alternatives to the JIPSD.   One possibility is for the JIPSD to retain the service right to fire protection, but agree to allow the Town to pay for fire protection directly.  That is, the JIPSD and Town would sign an intergovernmental agreement such that the JIPSD collects 35.1 mills less in the Town's tax district and the Town will pay 35.1 mills of its collectable property base directly to the JIPSD for fire protection.   That is approximately $2 million per year.  The key benefit to the JIPSD is that it will retain all service rights in the Town.

The other alternative is for the JIPSD to agree to transfer the service right to fire protection to the Town, and provide fire service by contract to the Town.   This would be most similar to the arrangement the JIPSD already has with the City of Charleston and the City of Folly Beach.   As long as the JIPSD has federal loans (the next twenty to thirty years,) the Town is obligated to pay the JIPSD for fire protection one way or another.   It would be financially impossible for the Town to pay for its own fire department and also pay the JIPSD for fire protection, so the JIPSD can be confident that the Town will continue to receive fire protection from the JIPSD as it does today and make the necessary payments to support the JIPSD fire department.    Like most residents of the Town, I am happy with JIPSD fire protection and so have no problem with this approach.

I am committed to the Town remaining within the JIPSD so that Town registered voters have the right to vote for JIPSD Commissioner and remain eligible to seek election as JIPSD Commissioner.    Since the JIPSD will continue to directly collect taxes in the Town, both their bond millage and 16 mills for solid waste collection and other services, I think the right of Town residents to vote in JIPSD election will be unchallengeable.   As long as the JIPSD has the legal right to collect $2 million or more from the people of the Town each year, it is essential that we have the right to vote for JIPSD Commissioner.

JIPSD Chairman Donald Hollingsworth asked to meet with me in February.    He is strongly committed to the Town and JIPSD working together and showing solidarity.   I agree.   We have agreed to meet each month.   I outlined the Town's budget proposal at our March meeting.  I greatly appreciate Chairman Hollingsworth's willingness to discuss the Town's tax proposals.    I hope that the Commissioners will come to an agreement with the Town that will allow for tax relief this fall.

Ben Road Contract Approved

Charleston County Council approved the contract for paving Ben Road on Tuesday evening.   The cost is $371,829.   The Town is providing a 50% funding match.   Weather permitting, construction should begin in April.

Town Council Report March 19

Town Council waived the one year waiting period for reapplication for the cell tower at the soccer field.   The application will be resubmitted and return to the planning commission before coming back to Town Council for a public hearing and first reading, perhaps as soon as April 16.
   

Council recognized Jane Hale, our Senior Finance Clerk who will be retiring at the end of March.   She started with the Town during the third incorporation and returned soon after the Town started up again in 2012.
 

The draft 2015-16 budget was presented to Council.   The public hearing on the budget and first reading is scheduled for the April 16 meeting.
 

Council choose me to Chair the History Committee and I asked the Mayor Pro-tem to help.   Members that Council selected for the History Commission were Doug Bostic, Eugene Frazier, Paul Hedden, Ashley Welsh, Inez Brown Crouch, Donald Hollingsworth, William "Cubby" Wilder, and Willis "Skipper" Keith.
 

Council tabled the resolution regarding representation on the CARTA board.   Councilman Stokes spoke with some members of the CARTA board and they suggested that a substantial annual budget commitment would be necessary for the Town to join the board and that would not be for new services.    CARTA has a large financial deficit at the current time.   I want to do an analysis of the CARTA budget situation before the Town pursues this further.
 

Council approved a resolution opposing the search for oil off the South Carolina coast.
 

Council approved second and final reading of the emergency purchases ordinance and the emergency powers ordinance.    These ordinances were adopted on the advice of the consultant who is helping the Town review and revise our emergency plan.   The ordinances are very similar to those of the Town of Kiawah Island.   The first draft of the Hurricane portion of the plan has been completed.

Oil Exploration Plans

Town Purchase of Pinckney Park Delayed

The Town's purchase of Pinckney Park is delayed for six to nine months.   A relative of the Harris family has filed an appeal.  The parcels the Town is purchasing is part of the same property that has already been adjudicated by the South Carolina Supreme Court.   I am confident that the Harris' will prevail, but we can only close when the title is clear.