FORT MILL TOWNSHIP -- Local business leaders support a state bill even though it could result in higher taxes on commercial and industrial property in York County.

The measure is intended to help the county's schools close budget gaps in 2008-'09.

"It might seem a little counterintuitive that we'd support a tax increase for businesses, but the Chamber has always been supportive of the schools," York County Regional Chamber of Commerce Chairman Wayne Wingate said. "There is nothing more important in our community than education."

The bill, written by Sen. Wes Hayes, (R-Rock Hill), would get rid of a local cap on the number of mills the four York County school districts can impose on commercial property each year. The cap restricts the yearly increase to six mills. Because of the switch in school funding from residential property taxes to a statewide sales tax increase, school districts can no longer tax owner-occupied residential property; Rental properties and second homes can still be taxed for school district operations, however.

While supporting the bill, Wingate said the Chamber hopes legislators will take a comprehensive look at the state's "hodgepodge" of tax laws and exemptions and create a better, more fair system.

"Act 388 is the disaster, not the cap," Wingate said, referring to the law that made school funding dependent on sales tax revenue. "It's a disaster for business, it's a disaster for the schools, it's a disaster for everyone that buys anything in the state. Now with the slowdown in the economy it just compounds the problem."

Hayes' bill sailed though the York County delegation in the Senate on a 4-0 vote last week. However, the county's seven-member House delegation is split on the matter, according to Rep. Mick Mulvaney. Because the bill deals exclusively with York County school districts, only the members of the York County delegation are allowed to vote on the measure. It also must be signed by the governor.

"I haven't had a chance to review the bill yet, but I understand the basic concepts behind it," Mulvaney said last week.

All four schools superintendents in York County asked the delegation to lift a cap on the millage rate increase the districts are allowed to charge each year.

"We felt so much local authority has been removed from the school boards [and] this would give a little bit back," Fort Mill Superintendent of Schools Keith Callicutt said. "This doesn't impact the Act 388 formula, but it does allow us to raise millage up to the current state cap."

The Act 388 formula creates a different cap for each district based on the Consumer Price Index and the district's growth rate. For Fort Mill, that would translate to a cap at 13.1 mills for 2008-09, Callicutt said. However, because the district's budget has to be finalized in early June and Hayes' bill still has to make it through two more votes and Gov. Mark Sanford's signature, he doubts Fort Mill will be able to take advantage of it until 2009-10 - if it passes this year.

"When we passed Act 388, the fear was that if we take off the owner-occupied taxes, cities and counties might fill the vacuum by raising taxes," Hayes said. "So we put a cap on all local governments of the CPI plus population growth (of an area)."

The state keeps track of the CPI and local growth rates and uses a complex formula to determine from those numbers what the millage cap is each year for each local government. Some years that might be more than the six mill limit of the local cap, some years it will be less, but with both caps in place districts in York County are forced to go with the lower rate.

Hayes said his bill would exempt the York County Districts from the local cap and leave them with only the Act 388 cap. It will also allow the districts to get permission from the local delegation in the form of legislation to go beyond the Act 388 cap, rather than seek the approval of voters in a referendum.

The legislation will not affect home owners' tax bills, unless it is for a second home or rental property. However commercial and industrial property owners would feel the effects. Because residential property is no longer counted, the value of a mill this year is slightly more than half of what is had been. Last year, according to district officials the value of a mill was approximately $250,000, this year one mill is worth around $161,000.

Local House delegation members could get the bill as early as this week. Hayes said if the House members make any amendments to the bill they will likely remain in the final version.

"It will be the best we can do this year," he said.

"I asked a lot of questions and still haven't gotten them answered," Mulvaney added.

He said the bill seems to go farther than he had assumed it would and is wary about removing taxpayer protections such as requiring a referendum for approval to exceed the cap.

However Hayes said the bill simply puts York County districts on the same footing as the rest of the school districts in South Carolina. Most of the rest of the districts statewide have done away with local caps on millage increases, but York County districts are still constrained by such a cap.

"I asked when the six mill cap was put in place, but no one knew," Callicutt said. "No one even knows the rationale behind it at the time."

Meanwhile, the House recently passed a Senate budget provision proposed by Hayes to help fast-growing school districts fill budget shortfalls. The Fort Mill School District would probably receive $115,000, a Senate Finance Committee spokesman said.

"I put in money for districts growing faster than the state average," Hayes said. "It's not a great deal of money, but at least it was an acknowledgment that the Senate knew we had to do something for fast-growing districts in Act 388."

For more, visit www.fortmilltimes.com.