The Town has asked to James Island Public Service District (JIPSD) to sign an Memorandum of Understanding (MOU) regarding property tax credits. The proposed MOU is on the agenda for the JIPSD Commission meeting tonight.
The proposed MOU is not a binding agreement but rather a road map for further negotiation. There are many details that need to be worked out. When a final agreement is complete, then it will return to both Town Council and the JIPSD Commission for final approval. The purpose of the MOU is to show that both Town Council and the JIPSD Commissioner support the concept and want to move forward.
The MOU outlines the proposal. The Town would directly pay the JIPSD for some of the cost of providing fire protection and solid waste collection services in the Town and the JIPSD would consent to allow the Town to place a credit on the JIPSD line on the property tax bills going to residents of the Town.
Neither the Town nor the JIPSD prepare their own property tax bills. Instead, both participate in what many call the "County tax bill." These are the Charleston County consolidated property tax bills prepared by the Charleston County Auditor. If you look at you tax bill, you will see a list of government agencies that collect property tax in your area. For Town residents, in District 308, this includes both the Town and the JIPSD. The Town charges 20 mils but the amount paid is zero because of the Town's LOST credit. The JIPSD charges 64.4 mils, and there is no credit. How much you pay the JIPSD depends on the assessed value of your property.
If the Town and JIPSD agree to the cost sharing plan, then an additional Town credit would reduce the amount on the JIPSD line and so the total amount each Town taxpayer must pay the County Treasurer. As a result of the Town credits, the County Treasurer would be collecting less from Town taxpayers on behalf of the JIPSD, so the JIPSD would receive less from the County Treasurer. However, the amount the Town pays the JIPSD for services would be exactly equal to the reduction in the amount of taxes they receive from the County Treasurer, so the JIPSD would receive the same revenue in total from its provision of services in the Town. It would receive less from the property taxpayers in the Town and more from the Town itself.
In effect, the Town would be paying some of the cost of providing JIPSD services on behalf of its residents rather than them having to pay the JIPSD entirely by property tax. The people in the Town will pay for JIPSD services partly by property tax and partly through their Town government.
I plan to ask Town Council to spend $1 million next year for this program. This would reduce what a homeowner in the Town must pay the JIPSD by approximately 30% which will more than roll back last year's 13% property tax increase.
Is this arrangement legal? It was developed by the Pope Flynn law firm and they argue that it is legal. I agree.
Most importantly, the South Carolina Constitution authorizes local governments to share the cost of providing services. The South Carolina Code allows for the same. Payments are made by one government to another all the time. The City of Charleston and the City of Folly Beach both pay the JIPSD for fire service. The Town pays the City of Charleston so that Town residents pay the same cost as City residents for youth recreation and tennis. The Town pays the Charleston County Sheriff's Office to rent the patrol cars used by the Island Sheriff's Patrol (we pay the deputies directly.) The Town pays Charleston County Public Works for repairs to drainage pipes. The Town of James Island pays a monthly sewer bill to the JIPSD.
What about tax credits? The South Carolina Constitution has a provision that it should be liberally interpreted to grant to local government all powers not denied and fairly implied. Nothing forbids municipalities from providing property tax credits against the taxes due to a special purpose district operating in its area of jurisdiction and it is a reasonable method of sharing costs for the provision of services, something specifically allowed. I believe that the Town and the JIPSD have every right to agree that the Town may provide credits against the JIPSD property tax as a method of sharing cost. Unless the South Carolina legislature specifically forbids this plan, we may carry it out.
The South Carolina Supreme Court has ruled that property tax credits do not violate provisions of the South Carolina Constitution regarding uniformity of taxation. According to Pope Flynn, it would be legally difficult for the JIPSD to provide a lower property tax millage in the jurisdiction of the Town while keeping its millage in the unincorporated area the same, even if the Town made up the difference by direct payments to the JIPSD. But in Westinghouse vs. Charleston County, the South Carolina Supreme Court has said that tax credits do not violate that provision even if the way they impact the amount of tax paid is not uniform. That involved a business challenging the local option sales tax because the benefits are concentrated on homeowners. The tax credits the Town proposes will be provided to property owners in the Town and not property owners in the unincorporated area. The JIPSD millage will remain uniform, but the amount of property tax paid directly to the JIPSD net of the credit will not. However, the total share of the cost paid by the Town by both its taxpayers and the Town itself and the amount paid by residents of the unincorporated area will remain unchanged. Those shares will depend on the assessed value of the property in each area.
The Town is not required to provide tax credits against property outside its jurisdiction. We don't have to provide credits to people who live in the City of Charleston, Folly Beach, the unincorporated area of Charleston County, or, for that matter, people who live in Greenville. It is normal for a Town program to especially benefit Town residents. In particular, the Town is not obligated to use its revenues to provide credits to the residents of the unincorporated area of James Island, even though they receive services from the same special purpose district.
What about the JIPSD? The plan does not require the JIPSD to spend any funds or direct other resources to especially benefit Town residents. They are solely consenting to allow the Town to provide a credit on their property tax line, with no loss in total revenue. There will be absolutely no negative impact on the District or anyone receiving services from the District whether they live in the Town or the unincorporated area of James Island or even the City of Charleston or Folly Beach.
The Town of James Island pays the Charleston County Sheriff's Office to rent patrol cars for the Island Sheriff's Patrol. The Sheriff's Office has not refused to accept the Town's money because it benefits only residents of the Town of James Island and not the residents of the unincorporated portion of James Island or any other part of unincorporated Charleston County or the Town of Ravenel or the City of Charleston. The Sheriff's office, of course, is funded by Charleston County, substantially by property tax and provides primary law enforcement in the Town of James Island, the unincorporated areas of the County, and many of the smaller municipalities, including Ravenel.
Did you know that the City of Charleston provides larger property tax credits for residents of James Island than Daniel Island? Why? Because James Island is in Charleston County and Daniel Island is in Berkeley County. Those two counties provide different amounts of funding for property tax credits. The Town of Summerville provides no credit for most of its residents, but it does provide a credit for those who live in Charleston County. Why? Because most of Summerville is in Dorchester County, which provides no property tax credits. The City of North Charleston provides property tax credits to most of its residents who live in Charleston County but none to those in Dorchester County. Again, it is because Dorchester County does not provide property tax credits.
Similarly, the Town of James Island is willing to fund property tax credits in its jurisdiction. There is nothing at all wrong with the JIPSD cooperating with the Town and consenting to allow the Town to provide credits against its line on the property tax bill, even if there is no one to provide funds for credits in the unincorporated area of James Island.
Of course, it has been a long standing goal of the Town to give those in the unincorporated area of James Island an opportunity to rejoin the Town. If they do, then the Town will expand the Island Sheriff's Patrol into those areas. The Town will pay for sidewalks and paving roads in those areas. And if the JIPSD will cooperate with the Town on tax credits, we will help pay for fire protection and solid waste collection too in those areas that choose to rejoin the Town.
But it would be unreasonable for the Town to delay the provision of its services to people in the Town until those in the unincorporated area of the Town can rejoin. Should we close down the Island Sheriff's Patrol because those in the unincorporated area have not yet joined the Town? Similarly, it is unreasonable for the Town to delay a program to help our residents pay for fire protection and solid waste collection until those in the unincorporated area are included in the Town. And it is unreasonable for the James Island Public Service District to delay cooperating with the Town on a program that will greatly benefit the majority of its constituents.
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