A 2021 survey conducted by USC-Aiken found that SC voters do not know that homeowners do not pay school taxes on a primary residence. More than 40 percent of voters were unaware of the school tax exemption and about 33 percent incorrectly indicated there is no school tax exemption (Young & Thornburg, Findings of the 2021 South Carolina Citizen School Tax Survey. Nov 2022). Maybe worse, nearly 20 percent of respondents in this survey reported property taxes on primary residences to fund public schools are too high. This makes no sense – since 2007, SC state law has exempted 100 percent of owner-occupied homes (primary residences) from property taxation for public school operations.
An exemption means that a person does not have to comply with a requirement. This tax exemption means that homeowners do not pay taxes on their primary residence for “operating costs” of schools (salaries, benefits, supplies, utilities, maintenance) but they do for debt service (construction, technology, equipment, renovations). On the Lexington County tax bill, this exemption is shown as “School Tax Credit.”
Operating costs – which homeowners do not pay – are the largest portion of public school expenditures. According to the publicly available report by the LexRich5 CFO at the May 22 school board meeting, “employees” accounted for 87 percent of district expenses and “supplies, services, and capital” were 13 percent of district expenses in 2023 (https://www.lexrich5.org/Page/29486). It is not clear from this description how much of the 13 percent is operating costs and therefore not paid through homeowners’ real property taxes.
Why does this matter right now?
The final vote on the LexRich5 School District 2023-2024 budget is scheduled to take place by the Board of Trustees this Monday, June 12, and an important point of discussion will likely be taxes – whether or not the school board will raise the millage rate. The millage rate is the rate set by a school district to fund its operating costs and is used to calculate how much in taxes a homeowner owes. At the May 22 LexRich5 Board of Trustees meeting, district administration requested an increase to the millage rate of 19.9 mills. A mill is 1/1000 of a property’s assessed value; for every $100,000 of assessed value, the value of a mill is $100.
If the Board of Trustees approves the district’s request to increase the millage rate, a homeowner’s taxes on their residence will not increase. Because of the tax exemption written into state law, homeowners do not pay any more or any less when the Board of Trustees changes the millage rate. Who does? The tax exemption does not apply to owners of land, commercial properties, or second homes. The tax exemption also does not apply to personal property for individuals (cars, boats, etc.) or businesses (furniture, fixtures, equipment). But it would be naive to think these taxes are entirely borne by commercial entities, since costs are passed through consumer rents and prices if possible. In that way, a homeowner might indirectly contribute to the public schools’ operating costs, but the actual dollar amounts are much more difficult to quantify than what you may read on social media.
Why might the millage rate be increased? Overall costs have increased, state law has put more requirements on public schools, and the Board of Trustees had lowered the millage rate in 2021 even though the superintendent and CFO advised against this change given uncertain economic predictions. Fast forward to 2023, and at the May 22 Board of Trustees meeting there were three budget options presented and discussed: (1) fully fund every request and compliance requirement with 22 mill increase, (2) fund many requests and all compliance requirements with 19.9 mill increase, (3) fund compliance requirements by reducing other expenses with no millage rate change. The details are available at https://www.lexrich5.org/schoolboard (board meeting information page).
The decision is not an easy one for our elected leaders. The budget vote is a weighty concern for our community, impacting everyone through their wallets (some more than others) and the education of our community’s children. Strong public schools are an investment in the future; our entire workforce depends on them. Let’s educate ourselves, have civil discussions, and be quicker to research facts than jump to conclusions.