Taxes in the Town

I don't like any tax, however, my primary goal for the Town has always been to keep the Town from increasing the tax burden on our residents and property owners.    This is conditional on maintaining the level of service that existed before the formation of the Town.   I also have worked for improved services, but that is conditional on avoiding any increase in the tax burden.  

I can't claim perfection, but services have improved without any significant increase in tax burden.  Certainly, there has been no increase in Town taxes like Mayor Riley and other Town opponents claimed during our incorporation fight.

I have never promised that the Town would have no taxes.   Mayor Mary Clark would frequently brag that the Town has never had taxes and never would.   Over a decade ago, as a member of Town Council, I told her that she should look at our budget--we have all sorts of taxes in the Town.   But it went in one ear and out the other.   She would be back bragging on how we had no taxes and never would. 

Of course, up until now, the Town had no property tax millage.    Council has just approved a 20 mil property tax on a 3-2 vote, but also property tax credits so that the Town won't be increasing anyone's property tax.   This proposal is very consistent with my primary goal of not increasing the tax burden in the Town.

Reviewing material from my 2010 campaign for Mayor, I have found nowhere that I promised I would always oppose a Town property tax.   I would think my view then, like now, was a goal of not increasing the tax burden in the Town.   

Further, while avoiding tax increases is primary, I have also worked to reduce the property tax burden in the Town.   My approach has been to have the Town use the revenue we receive from the LOST property tax credit fund to purchase services from the JIPSD on behalf of the Town's residents.  In my view, the amount of tax collected by the JIPSD on property tax  bills should be reduced, so the property taxpayers in the Town would pay less.   The JIPSD would get some or all of its money to cover the cost of services in the Town from the Town government rather than getting all of it from directly collecting property taxes within the Town's jurisdiction.

I am not sure when I first began to advocate that approach, but it was sometime after I became Mayor in 2010 and saw first hand the administrative nightmare created by mailing tax "refund" checks.  This approach was mentioned in the last newsletter the Town mailed in 2011, right before Mayor Riley and the South Carolina Supreme Court closed us down.  It was not original to me.   This is exactly what Mayor Joan Sooy had worked out with the JIPSD and Charleston County Auditor in 1995.   Unfortunately, the first Town was ruled illegally formed just before the tax bills including the Town tax credit were to be mailed by the County Auditor.

Using LOST funds to reduce the amount collected on the tax bill was outlined in the Town's application for incorporation that we submitted in November of 2011.   It was also outlined in the material distributed by Free James Island during the election campaign for incorporation in the spring of 2012.    Nothing submitted by the Town in our incorporation application and none of the Free James Island literature promised the Town would mail refund checks.  Nothing promised that we would never have a Town property tax.

While I was unopposed as candidate for Mayor in 2012, reduced property tax payments to the JIPSD in exchange for the Town paying for JIPSD services was part of my platform.   I asked every candidate for Council in 2012 whether they would support my plan for tax relief.   I explained why "mailing checks" was a bad idea.   All of them agreed other than Sam Kernodle.   Sam Kernodle didn't support mailing the checks.  He favored spending the LOST money on Town services.   Interestingly, Sandi Engelman, who is now party to a suit aimed at forcing the Town to "mail the checks," agreed with using the money to pay for services from the JIPSD in exchange for a reduction in the amount paid to the JIPSD on the tax bill.   She expressed no interest in "mailing the checks" in 2012.

The Town was only open again for business in August of 2012, past the deadline to do anything with the 2012  tax bill that comes out in October.  However, I immediately asked the County Auditor to create a Town tax district.   They finished in the spring of 2013.  I then shared the proposal for property tax relief with the JIPSD, in plenty of time to allow for lower taxes on the 2013 tax bill.   A Town tax credit would be put against the JIPSD taxes and the Town would pay the difference to the JIPSD for services.  The Town received a letter back from them refusing cooperation and stating that the Commissioners believed that citizens preferred to receive a check from the Town.    (We now know that this is the personal preference of Commissioners Hollingsworth and Platt.  They want a check in their hand.)

At that point, I came to the conclusion that the best approach would be for the Town to collect its own property tax and provide a credit against that tax.   If the Town has its own property tax, it must provide a credit.  My proposal, of course, was for the JIPSD to lower its taxes in the Town, and have the Town pay the JIPSD for services by contract.   That approach had also been included as a possibility in the Town's application for incorporation in November 2011, though it was stated as a less likely approach than providing a credit against JIPSD property taxes.

In November 2013, Town Council voted 4-0 for a resolution instructing me to negotiate with the JIPSD for them to cease collecting taxes in our Town and have the Town instead collect taxes.  The Town would purchase fire and solid waste services from the JIPSD by contract.   Because the Town would be obligated to provide a property tax credit against our own taxes, this would have allowed for a tax reduction on the 2014 tax bill.   Councilman Blank and Mullinax and Councilwoman Berry were all on board. ( I expected Councilman Kernodle to oppose, but he missed the November meeting.   That was not unusual.)  

I wrote the JIPSD and they said no.    While the letter was signed by then JIPSD Chairman David Engelman and Vice Chairman Donnie Hollingsworth, they later said at a JIPSD Commission meeting that it was all over their head and Trent Kernodle wrote the letter.   So, in his letter, Kernodle argued that having the Town pay for services from the JIPSD would be illegal and advocated that the Town mail the checks.    The Town provided a response proposing further talks and pointing out the obvious errors Kernodle's arguments, but there were no talks. 

I spoke with Senator Thurmond about the matter, and he suggested we talk to Charleston County about having a tax credit against the County tax bill.    While a good idea, it turned out to be a dead end.   During discussions between the County Attorney and Town Attorney, it was apparently suggested that the County would argue before the Supreme Court that the Town shouldn't receive any LOST funds because it has no property tax.  That was a bit disconcerting.

During the spring and summer of 2014, the Town received opinions from the South Carolina Attorney General rejecting Trent Kernodle's arguments.

Trent Kernodle ran for Mayor in 2014.  One of his planks was to mail the checks.   He said that it was just like Christmas when he received the checks from the Town.   The last set of checks mailed by Mary Clark arrived right before the 2010 Town election.   A special Christmas for election day courtesy of the Mayor. (Interestingly,  Councilman Sam Kernodle never once proposed that the Town mail the checks.   He never even asked to put it on the agenda.   I think the plan has been all along for the Kernodle's to hand out theses political Christmas presents--one way or another.)

Cooperation with the Town was a major issue in the 2014 JIPSD Commission elections.   Commissioner Inez Brown-Crouch, who has aways worked with the Town came in first.   Commissioner Cubby Wilder, who promised to work with the Town, came in second.   Kay Kernodle, who was committed to fighting the Town on every issue, came in third.   On election night, it looked like former Town Councilwoman Mary Beth Berry would win and so we would have 4 Commissioners who would work with the Town.  However, absentee votes allowed Chairman Hollingsworth to squeak back in.   So, there were only three Commissioners who would support the Town--McMillan, Brown, and Wilder.    It looked obvious to me that we could expect to lose 4-3 on every issue.

After Commissioner Wilder was sworn in, however, it became clear that the Town could not count on his support.   It is understandable.   He owns a building on Mosquito Beach that he rents out to a nightclub.   Charleston County found various code violations, which could have forced him to close down.   Trent Kernodle said during his interview to return as JIPSD General Council just last week that he has been providing Commissioner Wilder with free legal help on the matter.    It is natural that Commissioner Wilder would feel a moral obligation to vote on Commission matters in a way that would help the Kernodle's achieve their political goals--including the Kernodle "mail the checks" plan.   And so, we are back to 5-2 against the Town whenever it counts.

Anyway, at the Town's budget workshop in March 2015, I asked each member of Town Council if they favored mailing checks.  Not one said they did.   Councilmen Blank and Milliken were very vocally opposed.   Councilman Stokes was opposed as well. (Of course, I had asked him before I endorsed him in the 2014 election.)   I had to ask Councilman Mullinax, but he also said no.   

Also at the March budget workshop, several members of Council argued that the Town had waited long enough for tax relief and that unless we can get the JIPSD to agree to something this year, we should start to spend the LOST money.   Councilman Milliken was most vocal in favor of spending the money.   (His wife, Susan Milliken, apparently proposed to members of County Council that we spend most of what we receive each year from the LOST property tax credit fund to keep open the Camp Road library branch after 2017.)   There was no vote, but listening to each member of Council, it was clear that there was a majority in favor of spending the money if my longstanding plan to get tax relief was not implemented and soon.

In March of 2014, I met with JIPSD Commission Chairman Hollingsworth to outline a proposal that the Town collect  a 35.1 mil tax and pay the JIPSD for fire service by contract.   In exchange, the JIPSD would lower its property tax by 35.1 mils.  The Town would provide a LOST credit against our own tax.  This was in plenty of time for a very significant tax cut on the 2015 tax bill and lower taxes thereafter.  A few days later, I emailed him the proposal in writing and asked him to forward it to his finance staff so we could begin discussions.  

The next week, the Town was served with a  class action lawsuit from former JIPSD general counsel Trent Kernodle, with former JIPSD Chair David Engelman and his wife, Sandi and former Commissioner Rod Welch as parties.  The suit seeks to force the Town to carry out Kernodle's campaign plank--mail the checks.    I don't think the timing was an accident.

Due to the suit, I am more convinced than ever that it is in the best interest of the Town to provide a tax credit against our own tax millage.   That is what the vast majority of municipalities eligible for LOST revenues do.   I believe it puts the Town beyond legal challenge.    The worst scenario for the Town would be a court ruling that only municipalities with property tax are eligible to receive revenue from the LOST property tax credit fund.   That would mean that our money would be divided up among the municipalities that do have property tax.   I don't think that outcome is likely, but we won't have to worry about that any more if we are providing a credit against our own millage.

I will continue to try to find a majority of JIPSD Commissioners who will reduce the property tax they collect in the Town and accept our money in exchange for the provision of services.  I will continue to try to find a majority on Town Council that will agree to pay for JIPSD services by contract. I will continue to work for lower property taxes in the Town. 

Right now, I think it is in the best interests of the Town and the JIPSD to have a contract for the provision of solid waste services.   Council approved the needed Town budget 4-1 on first reading in May.   I wrote the JIPSD to ask them to put in on their agenda for a vote.    As usual--there was no vote by the JIPSD.

Unfortunately, it will be very difficult to accomplish tax relief as long as a majority of JIPSD Commissioners are in Trent Kernodle's back pocket--especially as long as we have a pending lawsuit that Kernodle hopes will provide him another big payday at the expense of the Town.    The next JIPSD election is in 2016.  (Sadly, I fear that some of those suing the Town have substantial influence on our own Town Council, but they don't have a majority like they do on the JIPSD.)

In the meantime, I have agreed with other members of Council that we should no longer continue to accumulate the revenue we receive from the LOST property tax credit fund as we have for the last three years, but instead use money we expect to receive in 2015-16 to help pay for our new Town Hall.   There are financial benefits to paying it off sooner rather than later.

I have not given up on the goal of reducing property tax in the Town.

And most importantly, the Town tax millage and credit proposal will not increase anyone's tax burden.   And that has always been my primary commitment to the voters of the Town.