Could a South Carolina town with zero property tax millage begin or resume a property tax?

Plain-English summary

In 2017, the Municipal Association of South Carolina asked whether a newly incorporated town or one currently charging no property tax could impose a levy. The Attorney General reaffirmed its earlier Edgefield opinion. It said a municipality that had previously imposed millage could increase a current zero rate, but the increase remained subject to the statutory cap and any applicable exception.

The AG distinguished a new levy from an increase in an existing tax. It read state law as requiring specific statutory authorization before a local government imposed a new tax. For a newly formed municipality, it predicted that the general statutory grant of municipal property tax authority could supply that authorization. It rejected the view that the increase cap erased municipal taxing power, while insisting that the cap still limited increases.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did a zero rate permanently prevent a town from levying property tax?
A: The AG said no for a town that had previously imposed millage, but any increase still had to fit the statutory limits or exceptions.

Q: Could any local government impose a new tax without a statutory grant?
A: No. The opinion read the new-tax rule as requiring specific authority from the General Assembly.

Q: Did the AG abandon its earlier Edgefield opinion?
A: No. It expressly reaffirmed the 2014 analysis after reviewing the Municipal Association's objections.

Background and statutory framework

The opinion read S.C. Code § 6-1-320 on millage increases with S.C. Code § 6-1-310 on new taxes and S.C. Code § 5-7-30 on municipal taxing authority. Its analysis turned on whether a municipality had levied before, whether a proposed rate was an increase or a genuinely new tax, and whether statutory authorization existed.

Citations and references

• The conclusion said a municipality with a prior levy could increase zero millage “pursuant to the limitations” in the increase statute.
• The opinion also said new taxes required specific statutory authorization.

Official title

On the authority of a municipality to levy a new tax and/or increase a property tax in accord with S.C. Code §§ 6-1-310, 6-1-320 et seq.

Requester

Ms. Miriam Hair, Executive Director, Municipal Association of South Carolina.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/january-20-2017/
• Original PDF: https://www.scag.gov/wp-content/uploads/2017/01/Hair-M.-OS-10086-FINAL-Opinion-1-20-2017-01238145xD2C78.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ALAN WILSON
ATTORNEY GENERAL

January 20, 2017

Ms. Miriam Hair, Executive Director
Municipal Association of South Carolina
P.O. Box 12109

Columbia, SC 29211

Dear Director Hair:

Attorney General Alan Wilson has referred your letter dated September 19, 2016 to the Opinions section for a response. The following is this Office’s understanding of your question and our opinion based on that understanding.

Issue (as quoted from your letter):
“Does a newly incorporated municipality or municipality that is otherwise without a property tax levy have the authority to levy [a] property tax under South Carolina law?

The Municipal Association of South Carolina has recently received inquiries from some cities in the state about their authority to levy a property tax. In particular, cities that currently do not levy a property tax are confused about their authority to do so in light of a previous opinion your office issued to the Town of Edgefield on July 9, 2014.

We believe all cities in South Carolina have authority through the state Constitution and the SC Code of Laws to levy a property tax.

Section 6-1-320 was intended to limit increases of, not remove, the levy authority

Plain language examination of this provision signals a key underlying presumption that the formula laid out would only be applied where there was a millage rate "imposed .. . for the preceding tax year." Every sentence proceeding from that initial sentence is clearly intended to build upon that baseline assumption, and fails where that baseline assumption is not satisfied.

The formula contained in the first sentence of (A)() fails to result in any millage levy where the previous year's millage rate was zero. The second and third sentences of (A)(1), which would formulaically allow large rate increases where CPI or population growth are significant, would simultaneously allow zero increase, and indeed no assessment at all where there was zero millage during the prior year.

This well-settled rule is made all the more applicable regarding the present question because of the South Carolina Constitution's liberal construction requirement in favor of municipalities Article VHT, Section 17 of the Constitution states the following:

RENBERT C. DENNIS BUILDING « POST OFFICE BOX 11549 » COLUMBIA, SC 29211-1549» TELEPHONE 803-734-3970» FACSIMILE §03-253-6283

Ms. Miriam Hair
Page 2
January 20, 2017

"The provisions of this Constitution and all laws concerning local government shall be liberally construed in their favor. Powers, duties, and responsibilities granted local government subdivisions by this Constitution and by law shall include those fairly implied and not prohibited by this Constitution. "

Likewise, SC Code of Laws Section 5-7-10 states in part:

"The powers of a municipality shall be liberally construed in favor of the municipality and the specific mention of particular powers shall not be construed as limiting in any manner the general powers of such municipalities. "

Conclusion

We believe cities, including those without a millage, have the authority to levy a property tax since their authority outlined above is still in full force and has not been altered or repealed, either explicitly or implicitly, by any other law passed by the General Assembly, including SC Code of Laws Section 6-1- 320.”

Law/Analysis:

Before we address your question, let us state that as a general rule, this Office recognizes a long-standing tradition that it will not overrule a prior opinion by this Office unless it is clearly erroneous or a change occurred in the applicable law. See, e.g., Ops. S.C. Atty. Gen., 2013 WL 6516330 (November 25, 2013); 2013 WL 3762706 (July 1, 2013), 2009 WL 959641 (March 4, 2009); 2006 WL 2849807 (September 29, 2006); 2005 WL 2250210 (September 8, 2005); 1986 WL 289899 (October 3, 1986); 1984 WL 249796 (April 9, 1984). Thus, in the absence of a change in the law concerning the referenced statute or clear error, we are reluctant to change our legal opinion. Nevertheless, we will review the conclusion in our July 9, 2014 opinion and the reasons therein on your behalf. See Op. S.C. Att’y Gen., 2014 WL 3640923 (S.C.A.G. July 9, 2014).

Let us begin answering your question by reviewing statutory interpretation. As a background regarding statutory interpretation, the cardinal rule of statutory construction is to ascertain the intent of the General Assembly and to accomplish that intent. Hawkins v. Bruno Yacht Sales, Inc., 353 S.C. 31, 39, 577 S.E.2d 202, 207 (2003). The true aim and intention of the General Assembly controls the literal meaning of a statute. Greenville Baseball v. Bearden, 200 S.C. 363, 20 S.E.2d 813 (1942). The historical background and circumstances at the time a statute was passed can be used to assist in interpreting a statute. Id. An entire statute’s interpretation must be “practical, reasonable, and fair” and consistent with the purpose, plan and reasoning behind its making. Id. at 816. Statutes are to be interpreted with a “sensible construction,” and a “literal application of language which leads to absurd consequences should be avoided whenever a reasonable application can be given consistent with the legislative purpose.” U.S. v. Rippetoe, 178 F.2d 735, 737 (4th Cir. 1950). Moreover, before we examine the particular statute, a background in tax interpretation would be helpful. Usually when one thinks of tax interpretation, he thinks of the long-recognized rule of statutory interpretation that any ambiguity in the imposition of a tax must be interpreted in favor of the taxpayer. See Op. S.C. Atty. Gen., 1967 WL 12119 (April 28, 1967);

Alltel Communications, Inc. v. S.C. Dept. of Revenue, 399 S.C. 313, 731 S.E.2d 869 (2012) (citing Cooper River Bridge, Inc. v. S.C. Tax Comm’n, 182 S.C. 72, 76, 188 S.E. 508, 509-510 (1936)).

Ms. Miriam Hair
Page 3
January 20, 2017

Keeping all of the above in mind, let us address some of your concerns. Quoting from your letter, you state:

“In this July 2014 opinion, your office took a position regarding the Town of Edgefield's ability to levy a

property tax. In 2006, the town eliminated its property tax on real property by adjusting the rate from 81 mills to 0. Your office took the position that the town was not allowed to reinstitute the previous 81 mill levy, but had to instead levy said tax in strict adherence to the formula provided in Section 6-1-320 of the SC Code of Laws.

If so applied, the rate increase cap provided for in 6-1-320 would forever restrict municipalities like Edgefield, newly created municipalities and municipalities that never previously levied a millage from ever doing so. This outcome, we contend, is inconsistent with the legislative intent behind 6-1-320, confounding to the legislative intent of Section 5-7-30 of the SC Code, and violates the constitutional mandate of liberal construction in favor of municipalities set out in Article V[I]II, Section 17.

As detailed previously, requiring new and yet-to-be-formed municipalities, municipalities that have never levied a property tax, or municipalities that have repealed a previously existing property tax to levy such tax in strict adherence to the provisions of 6-1-320 results in the effective denial of this authority to all such enumerated municipalities. Such strict adherence requirement amounts to an implied repeal of 5-7- 30, which first granted the authority, and a repeal of 5-1-10, which guarantees this and other previously granted authority will be enjoyed equally by all municipalities. Such an outcome would violate established SC law and the state's constitution.”

First and foremost, is this Office’s opinion, as expressed in the July 9, 2014 opinion, that Section 6-1-320 can apply to the Town of Edgefield (with a zero millage). Op. S.C. Att’y Gen., 2014 WL 3640923 (S.C.A.G. July 9, 2014). It is also this Office’s opinion that the July 9, 2014 opinion did not interpret Section 6-1-320 as preventing the Town of Edgefield from imposing a millage. Id. Moreover, we emphasized in the conclusion of the 2014 opinion that the Town of Edgefield may meet an exception in Section 6-1-320(B) for an additional millage increase. Id. South Carolina Code § 6-1-320 authorizes a local governing body to “increase the millage rate imposed for general operating purposes above the rate imposed for such purposes for the preceding tax year only to the extent of increase in the average of the twelve monthly consumer price indices for the most recent twelve-month period consisting of January through December of the preceding calendar year, plus, beginning in 2007, the percentage increase in the previous year in the population of the entity as determined by the Office of Research and Statistics of the Revenue and Fiscal Affairs Office.” S.C. Code § 6-1-320 (1976 Code, as amended).' We agree, as you mention in your letter, South Carolina Code § 6-1-320 references an “increase” in the millage rate “above the rate imposed for such purposes for the preceding tax year.” Id. However, we do not believe a court will determine the words “increase” and “above” preclude an entity with a rate of zero for the previous tax year from increasing the rate where the local governing body has previously issued a tax levy. Moreover, we believe the language in the statute is clear and unambiguous in limiting a tax increase regardless of the prior year’s rate and that such an interpretation is consistent with a plain reading and sensible interpretation of the statute.

Contrastingly, this Office believes a court will determine that Section 6-1-310 (“a local governing body may not impose a new tax after December 31, 1996, unless specifically authorized by the General

' Please see the statute for the full text.

Ms. Miriam Hair
Page 4
January 20, 2017

Assembly’) prohibits all new taxes imposed by any local governing body without specific authorization. S.C. Code § 6-1-310 (emphasis added). Our State’s Supreme Court has previously defined a tax when it stated that “[IJegislation is said to levy a tax when it fixes the amount or rate to be imposed.” Myers v. Patterson, 315 S.C. 248, 433 S.E.2d 841 (1993) (citing Wolper v. City of Charleston, 287 S.C. 209, 336 S.E.2d 871 (1985)). Black’s Law Dictionary defines “new” as:

new adj. (bef. 12c) 1. (Of a person, animal or thing) recently come into being . 2. (Of any thing) recently discovered . 3. (Of a person or condition) changed from the former state . 4. Unfamiliar; unaccustomed . 5. Beginning afresh .