Angus v. City of Myrtle Beach

Justice MOORE:

This action was brought by appellant/respondent Angus, a municipal taxpayer, challenging the property tax rollback millage rate adopted by respondent/appellant City of Myrtle Beach (Myrtle Beach) for the 1999-2000 fiscal year. Angus appeals a final order holding that Myrtle Beach did not violate S.C.Code Ann. § 6-1-320 (2004) or § 12-37-251(E) (2000). Myrtle Beach cross-appeals an order certifying a class of municipal taxpayers, and an order refusing to join the South Carolina Department of Revenue as a party. We affirm the rulings appealed by Myrtle Beach. We agree with Angus that the millage rate was improperly calculated, reverse on this issue, and remand for the trial court to determine the appropriate relief.

FACTS

As provided by § 6-l-320(A),1 in most years, a municipality may raise its general operating (GO) millage rate above that of the year before only by the amount the consumer price index rose the preceding year. In a year when a reassessment program2 is implemented, however, the “rollback mil*3lage,” rather than the previous year’s millage, is the base GO millage rate. Rollback millage is calculated under § 12-37-251(E).3

Following a countywide reassessment in 1998, Myrtle Beach was required to use rollback millage calculated under § 12-37-251(E) in setting its 1999-2000 GO millage rate. Section 12-37-351(E) requires that the total assessed value of property, which is the divisor used in calculating the rollback millage, be adjusted by deducting the amount of the increase attributable to (1) new construction, (2) renovations to existing structures, and (3) property and improvements not previously taxed. In calculating its rollback millage for 1999-2000, Myrtle Beach applied an additional variable to further reduce property values; it denominated this variable the “appeals allowance.” This variable took into account the fact that some owners would successfully appeal the new valuations placed on their properties. Myrtle Beach used an appeals allowance of 7.5%.

In addition, Myrtle Beach adjusted the dividend used in calculating the rollback millage. This dividend is the prior year’s property tax revenues. Although § 12-37-251(E) does not provide for any adjustment of this figure, Myrtle Beach applied an estimated collection rate of 86% to account for the fact that not all taxes billed would be collected. It is undisputed that in making these adjustments to the rollback millage calculation specified by § 12-37-251(E), Myrtle Beach did not utilize the provisions of § 6-l-320(C)4 which allows the mil*4lage rate limitation to be overridden and the millage rate increased by a positive majority vote of the governing body at a special public meeting.

ISSUE

Did the 'trial court err in determining that Myrtle Beach’s method of calculating rollback millage was proper?

DISCUSSION

Angus contends that the circuit court erred in holding Myrtle Beach did not violate § 12-37-251(E) by adding two variables to the statutory formula for calculating rollback millage without holding a public hearing as required by § 6-1-320(C). We agree that § 12-37-251© and § 6-l-320(A) do not permit Myrtle Beach to make these adjustments unless it utilizes the provisions of § 6-l-320(C).

As noted above, § 12-37-251© permits the use of three adjustments in calculating the rollback millage. Angus argues, and we agree, that application of the statutory maxim inclusiounius est exclusio alterius mandates that these variables and no others be used in calculating the rollback millage. The circuit court found this maxim inapplicable, reasoning that the variables used by Myrtle Beach “appear to be sensible and necessary devices” and that denying their use “would lead to a result that is unworkable, inefficient, inaccurate, and problematic.” The variables permitted by the statute are clear and unambiguous; regardless of the merit of Myrtle Beach’s formula, it is not what the statute allows. See Hodges v. Rainey, 341 S.C. 79, 533 S.E.2d 578 (2000) (where statutory language is clear and unambiguous, enumeration of certain exceptions excludes others).

The fixing of a tax rate is a legislative function that must be given the greatest respect by the courts unless that function is exercised in an illegal manner. Simkins v. City of *5Spartanburg, 269 S.C. 243, 237 S.E.2d 69 (1977).5 It is basic hornbook law that when a government entity levies a tax, “the method outlined in the applicable law must be followed, at least in substance and especially concerning all mandatory provisions.” 16 McQuillin Mun. Corp. § 44.97 (3d ed. 1998). We conclude Myrtle Beach’s use of non-statutory variables violates § 12-37-251(E). Further, Myrtle Beach failed to hold a public meeting as provided under § 6-1-320(0) which would have allowed it to legally override the mandatory requirements of subsection (A).

CONCLUSION

We hold the trial court erred in upholding Myrtle Beach’s use of non-statutory variables to calculate rollback millage without the override vote required under § 6-1-320(0 and we remand for the trial court to determine the appropriate relief. We affirm Myrtle Beach’s appeal pursuant to Rule 220(b), SCACR. See Waller v. Seabrook Island Prop. Owners Ass’n, 300 S.C. 465, 388 S.E.2d 799 (1990) (decision to certify a class rests in trial judge’s discretion); Charleston County Parents for Public Schools, Inc. v. Moseley, 343 S.C. 509, 541 S.E.2d 533 (2001) (party that is not indispensable need not be joined under Rule 19, SCRCP).

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

*6TOAL, C.J., and Acting Justice DEADRA L. JEFFERSON, concur. PLEICONES, J., dissenting in a separate opinion in which BURNETT, J., concurs.

. Section 6-l-320(A) provides:

Notwithstanding Section Í2-3 7-25 i(E), a local governing body may 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 the increase in the consumer price index for the preceding calendar year. However, in the year in which a reassessment program is implemented, the rollback millage, as calculated pursuant to Section 12-37-251(E), must be used in lieu of the previous year's millage rate.

. Countywide reassessments and equalizations of real property are conducted every fifth year. S.C.Code Ann. § 12-43-217 (2000). Mu*3nicipalities and other taxing entities within a county use the county's property valuations.

. Section 12-37-251(E) provides:

Rollback millage is calculated by dividing tire prior year property tax revenues by the adjusted total assessed value applicable in the year the values derived from a countywide equalization and reassessment program are implemented. This amount of assessed value must be adjusted by deducting assessments added for property or improvements not previously taxed, for new construction, and for renovation of existing structures.

. Section 6-1-320(0) provides:

The millage rate limitation provided for in subsection (A) of this section may be overridden and the millage rate may be further increased by a positive majority vote of the appropriate governing *4body. The vote must be taken at a specially-called meeting held solely for the purpose of taking a vote to increase the millage rate. The governing body must provide public notice of the meeting notifying the public that the governing body is meeting to vote to override the limitation and increase the millage rate. Public comment must be received by the governing body prior to the override vote.

. Despite our recognition of this basis principle in Simkins, we excused an illegal tax rate in County of Lee v. Stevens, 277 S.C. 421, 289 S.E.2d 155 (1982). In that case, a county auditor challenged the county’s authority to set the tax rate before current property values were known. We held the modest deficit caused by the county's error could be excused, but we prospectively ordered the tax rate to be based upon current property valuations. We found a prospective ruling necessary as a matter of “practicability and reasonableness” because of the various methods in use at the time by local governments statewide.

We view County of Lee v. Stevens as a narrow exception and decline to follow it here. The critical factor in that case was that there was no standard procedure in place to accomplish the statutory requirement at the local level; to strictly enforce that requirement would have caused havoc for local governments statewide. Here, there is no such special circumstance. We cannot condone a taxing entity's illegal acts in fixing the tax rate simply because the resulting impact may be characterized as modest.