Metro Atlanta school systems opting out of property tax break for homeowners

The law is a response to a runaway real estate market that stuck some homeowners with steep tax increases although tax rates remained the same. County assessors use data from recent home sales to determine properties’ taxable value, and property tax increases year over year can outpace the rate of inflation.

“It’s taxing people out of their homes,” said state Senate Finance Chairman Chuck Hufstetler, a Rome Republican who sponsored the law.

The Georgia Department of Revenue will calculate the cap every year based on the federal Consumer Price Index. The cap has not been set for the year, but is expected to be between 2% and 2.5%.

County commissions, city councils and school boards can currently opt out of the assessment cap by March 1. If a jurisdiction opts out, however, the legislative delegation that represents the area can craft a law that puts the question to voters in a referendum, Hufstetler said.

School board members in several districts have begun discussing lowering the tax rate if they opt out of the exemption.

School systems warn of cuts

District officials in the state’s three largest school systems — Gwinnett, Cobb and DeKalb — estimate the homestead exemption could mean millions of dollars in lost revenue each year.

Officials in Gwinnett, the largest school system in the state, estimated it would lose approximately $35 million each year. The average homeowner is expected to save $10 a month. The Cobb school district estimates that the exemption would equate to about $43 million lost annually.

DeKalb County officials put it another way: If the exemption had gone into effect in 2018, by the current fiscal year the district would have lost out on more than $190 million in revenue.

The districts warn the loss of that revenue could mean impacts to the services they offer. Local districts foot most of the bill for student transportation — a large expense that could see some cuts. And some districts say they may not be able to offer competitive salaries for staff, which is their largest expense.

It’s hard to say exactly what cuts would be made, said Byron Schueneman, the DeKalb schools chief financial officer. The districts could consider raising the tax rate for property that’s not a primary residence, which is about half the tax base in DeKalb.

At the first public hearing in Gwinnett, residents like Tim Hodnett implored the state’s largest school district not to opt out of the homestead exemption. Hodnett said his property taxes have “more than doubled” over the past seven years.

“The people voted for this bill statewide, and it wouldn’t be right for the school system to opt out of it,” he said. “I can’t opt out of my taxes — why should they be able to? They need to be able to live within the means of the school budget and make it work.”

The Fulton County school district implemented a homestead exemption in 2019, which is capped at 3% or the rate of inflation, whichever is greater. The school system’s Chief Financial Officer Marvin Dereef said since Fulton’s exemption has been in place, taxpayers have saved a total of $160.6 million, with the average homeowner saving $3,714 altogether. He said if HB 581 had been in place instead, the total savings would have been $132.2 million, with the average homeowner saving $3,200.

“The only thing … us not opting out … would do, in my mind, is just create an administrative burden, constantly comparing something that we already know (works better) and potentially just creating more confusion with taxpayers,” he said.

Existing exemptions a better deal?

Many cities and counties already have floating homestead exemptions that provide varying degrees of tax relief, and HB 581 says taxpayers must be granted whichever of the exemptions is most advantageous to them. But local governments can only grant exemptions that apply to their portion of the tax bill. Local governments also have the option to levy a 1-cent sales tax to make up the lost tax revenue; school systems do not.

Fulton County, the largest in Georgia, did not opt out of the assessment cap. The County Commission earlier this month instead took a ceremonial vote to opt in.

The county for two decades has capped assessment increases at 3%. Now, Fulton County homeowners will be granted whichever assessment cap is more advantageous: the 3% increase or the inflation-based increase under HB 581.

A county spokesperson said the new law would not have a significant increase on revenues. The average residential assessment increased 8% from 2023 to 2024, according to the county.

Gwinnett and Cobb counties freeze the assessed values of owner-occupied homes as of the first Jan. 1 after purchase, meaning those homeowners pay the same bill year after year if the property tax rate does not change. In Gwinnett, the freeze applies to the entire county government portion of the tax bill, but not the amount paid to the school district or cities.

The Gwinnett County Board of Commissioners is considering opting out of the HB 581 cap because the county government’s freeze is an even better deal for taxpayers, spokesperson Joe Sorenson said. Residential assessments in Gwinnett increased by nearly 5% last year on average, according to the county.

Cobb’s assessment freeze applies to the county general fund but not a separate tax rate for the fire fund. The Cobb County Board of Commissioners is holding hearings to opt out of HB 581, but county spokesperson Ross Cavitt stressed the board has not decided what to do. The average home sale price increased by 4.5% from 2022 to 2023, said Cobb Chief Appraiser Stephen White.

The city of Atlanta and DeKalb County did not respond to questions about their planned responses to HB 581.

During the Fulton school district’s second public hearing, Fulton County Commission Vice Chair Bob Ellis said while the existing homestead exemption may provide more relief overall, individual residents could benefit from HB 581 more.

“Looking at it from county government standpoint, the ultimate public hearing on this took place in November when 62% of the public voted for this and if there is any one individual who’s going to benefit from the new exemption, we should all opt in,” Ellis said.

Despite his pleas, the school board voted unanimously to opt out of the exemption.

By the numbers

$190 million — the revenue decline for DeKalb County Schools if the exemption had gone into effect in 2018.

$43 million — how much Cobb’s school district would have lost annually from the exemption.

$10 — the estimated monthly savings for a Gwinnett County homeowner from the exemption.

8% — the average residential assessment increase in Fulton County from 2023 to 2024.

Upcoming public hearings