Contentious hearing on boat property tax (S.317) ends with committee carrying bill over after proposing phased amendment

The subcommittee heard several hours of testimony and debate on S.317, a bill to reduce the taxable assessed value of watercraft in South Carolina. After testimony from boat owners, industry groups and county officials, the chair asked staff to draft a compromise amendment and the subcommittee carried the bill over to allow more time for analysis.

Sponsor remarks framed the bill as restoring competitiveness and keeping boats in South Carolina. "We're one of 13 states that currently levies an annual property tax on personal watercraft. Of those 13, South Carolina ranks dead last," a bill sponsor told the panel, citing comparisons of typical county millage. The sponsor said many buyers register expensive boats out of state and that the bill would provide relief to more than 600,000 South Carolinians.

Industry and advocacy witnesses, including a representative of the Boating and Fishing Alliance, told senators they had data showing that a large share of high-value boats purchased by South Carolina residents are registered out of state; one witness said "almost 80% of the boats priced above a hundred and $20,000 and purchased by South Carolina residents are registered out of our state."

County officials and auditors from inland and small rural counties warned that a statewide 50% reduction in assessed value would shift a substantial recurring revenue burden onto counties, schools and other local services. Saluda County Chair Jim Moore said the countys share of the reduction would be about $400,000, saying the loss would equal "5 mills" for his local budget and require either raising millage, cutting services or laying off staff. Oconee County auditor Christy Hubbard told the committee a 6% effective assessment ratio cut would reduce Oconees revenue by roughly $2 million and equal about 10 mills for county and school budgets.

Association of Counties representative Owen Bridal (Association of Counties) urged caution, noting five coastal counties already adopted lower assessment ratios and arguing a single statewide 50% cut could cost counties roughly $60 million annually. "When you give a small group of people a property tax exemption, it's born by the rest of the people," he said.

To find compromise, the committee chair asked staff to prepare an amendment with several features: (1) a definition of "watercraft" and related motor/titling clarifications, (2) a replacement assessment factor of 42.8571% (which would produce an effective 6% assessment ratio), (3) a phased implementation equally over three years so counties would not face the full revenue loss in a single year, and (4) an implementation schedule keyed to the property tax year beginning after 2025 so the first phase would begin with the 2026 property tax year. The staff draft was presented as a concept during the hearing; the subcommittee voted to carry S.317 over to allow further work and for full committee members to review the proposal.

Senators expressed broad sympathy for boat owners while repeatedly noting the policy would constitute a tax shift. Several senators said data from counties that previously lowered boat assessment ratios did not show a large repatriation of registrations and thus that revenue replacement could not be guaranteed. The subcommittee did not adopt final language but asked staff and stakeholders to return with more detailed fiscal projections and options for mitigating impacts on smaller counties.