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A taxing situation

KCSD’s proposed 1¢ sales tax could partially offset rise in property taxes

Posted: August 5, 2014 4:46 p.m.
Updated: August 6, 2014 5:00 a.m.
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If voters approve the Kershaw County School District’s $130 million list of projects for Phase 2 of its facilities equalization project (FEP), property taxes will go up in Kershaw County. The question is by how much, especially since the district is also asking voters to approve a 1-cent sales tax that would partially offset any property tax millage increases. Both referenda will be on the ballot on Nov. 4 during the general election.

The district originally estimated that millage on property taxes would have to increase by 35 mills in order to cover the $130 million in bonds issued to pay for Phase 2 projects. District officials later said that it could cut that increase by 9 mills to only a 26 mill increase by refinancing current debt, satisfying existing technology leases and reducing those leases going forward. The district further estimated that the 1-cent sales tax would reduce that by yet another 17 mills to only a 9 mill increase.

A mil is 1/1000th of a dollar, commonly used by governments to determine annual taxes on real property and motor vehicles.

Several things could happen in November that would affect exactly how much homeowners will pay in taxes. A majority of voters could reject both referenda, in which case no additional millage would be raised. Voters could approve the 1-cent sales tax but not the Phase 2 project list. If that happens, according to KCSD Chief Financial Officer Donnie Wilson, the district would use the sales tax money to pay off as much current debt as possible. Because of a new state law, Kershaw County would still be required to raise millage by whatever is necessary to cover the difference.

Wilson estimated that the 1-cent sales tax would raise $5 million in revenue.

“Don’t hold me to (that),” he said.

Voters could approve the Phase 2 list, but not the 1-cent sales tax. In that case, millage would increase by the estimated 35 mills, automatically imposed by Kershaw County per state law.

If voters approve both referenda, then Kershaw County would be required to raise millage by 9 mills to cover what the 1-cent sales tax and the district’s debt and technology lease refinancing does not.

The median value of a home in Kershaw County is currently $91,000, as of the first quarter of 2014. If the county had to raise the entire 35 mils to cover the district’s $130 million bond, the owner of such a home could expect to pay an additional $138.60, according to a formula provided by Kershaw County Auditor Robin Watkins.

The formula works like this, broken down into millage for school district operations (“School Tax”), district bond debt service (“School Bond”) and county property millage (“County Tax”):

• Property values are multiplied by 4 percent for a primary residence (6 percent for commercial and rental property). The 4 percent assessment of a $91,000 home comes to $3,960.

• School Tax is 156.9 mills, or 15.69 cents; when multiplied to the $3,960 assessment, this comes to $621.24.

• School Bond is 64.2 mills or 6.42 cents; multiplying this to the assessment comes to $254.32.

• County Tax is 73.9 mills or 7.39 cents; multiplied to the assessment, this comes to $292.64.

Added together, the owner of a $91,000 home can currently expect to pay $1,168.20 in millage. If the Phase 2 project referendum passed, but not the 1-cent sales tax, those homeowners could end up paying an extra $138.60 in millage. With the 1-cent sales tax and the district’s debt refinancing (reducing the millage increase from 35 mills to 9 mills), the increase would only be $35.40.

It should be noted that the city of Camden levies millage of its own at 86.9 mills. The owner of a $91,000 home in the city of Camden would pay another $354.81 in taxes. In addition, county residents are also charged a flat $55 solid waste fee that appears on their property tax bill.

The numbers listed here do not necessarily reflect what a homeowner will pay. There are homestead exemptions, municipal and state deductions, and residential school tax credits, all of which differ from individual to individual.

Recognizing the complex situation, Watkins encouraged all citizens to contact her office should they have questions.

“We want the public to be fully aware of how their tax bill is calculated and we welcome any questions,” she said.

 

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