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Summerville staff says county has been returning larger sales-tax credit than state formula requires
Summary
Town finance staff flagged that Summerville has been applying a 71% credit of local-option sales-tax revenue back to taxpayers while state law requires the full property-tax-credit portion be returned; changing to the statutory method would raise some homeowners’ bills and increase general-fund revenue available to the town.
Town of Summerville finance staff told council members that the town’s treatment of the local-option sales-tax credit differs from the statutory calculation and that adjusting to the state formula would raise tax bills for some homeowners while freeing more revenue for town operations.
The finance presenter said the statute requires the county treasurer to split collections into a property-tax-credit portion and a municipal portion, and to return 100% of the property-tax-credit portion to taxpayers. The town, however, has been using a practice that effectively returns 71% of the combined total instead of applying the statutory split — a pattern the presenter said dates to county practice and earlier council decisions that staff could not locate in the record. “What we do is we take 71% of the entire amount of the 2,600,000 and we devise a formula and give it to the treasurer,” the presenter told the council, citing a $2.6 million total used in the illustration.
Under the town’s current method, staff said the town has been crediting roughly $1.0 million back to taxpayers (71% of $2.6 million in the example) rather than returning only the property-tax-credit portion the statute requires; the municipal portion has been retained for general operations. The presenter said staff verified the numbers with the Department of Revenue and that the municipal portion is determined by where sales occur and population within Berkeley County.
Changing to the statutory method — returning 100% of the property-credit portion as the state law directs — would increase the property-tax credit line on an example $300,000 home from about $328 to about $632 under the illustration staff presented. Staff emphasized that the change is optional for the town; state law permits municipalities to keep municipal revenue but requires full return of the property-tax-credit portion. “We’re not required,” the presenter said of making a change, but added the town could choose to phase a change in or select a middle ground if council wanted to pursue it.
Council members and staff discussed the historical uncertainty about why the 71% practice was adopted, noting records dating back to 2007 show spreadsheets with the 71% figure but no formal council resolution explaining the practice. Staff urged that the council be aware the town’s current approach reduces general-fund revenue available for maintenance and capital compared with the strict statutory calculation.
Staff recommended that council members review tax bills and the statutory formula and said they could present options for a phased change or partial adjustment at a future workshop. No formal action or vote was taken during the discussion.
