“It will allow many of our Georgia citizens to stay in their homes knowing they won’t get a massive surprise bill that many simply can’t afford,” Hufstletler told colleagues.

A homeowner’s property tax bill is mostly made up of two elements: the tax rate and the assessed value of the property. School districts, cities and counties have been able to count on a boost in revenue without raising tax rates because the assessed values of homes and businesses in some areas have risen sharply.

The increases have been especially high in metro Atlanta, where home values have skyrocketed in some neighborhoods. But Hufstetler said that in recent years some areas outside of Atlanta have seen assessment increases of 40% or more.

He said about 75% of what homeowners pay goes to schools, and they have been taking in double-digit increases in revenue without raising the tax rate.

At least 39 Georgia counties, 35 cities and 27 school systems have adopted local measures limiting how much assessed values can rise. Some of them only benefit homeowners 65 or older.

A 3% cap on unimproved property assessment increases could mean local governments and schools would have to raise tax rates, but some lawmakers say at least that would make the process more transparent to homeowners, many of whom don’t understand why their home is valued at what it is.

“If they raise taxes now, it will be through the front door, not the back door,” Hufstetler said.

Lt. Gov. Burt Jones, president of the Senate, praised the bill’s passage. “This bill will make the taxation process both less confusing and less expensive for Georgia taxpayers,” he said.

Critics say one of the issues with the current system is that in some counties, big commercial property is undervalued by assessors, shifting the burden to smaller businesses and homeowners to pay for vital services. Hufstetler said his bill would not cap assessment increases on business property.

Some local officials like the idea of a cap on homeowner assessments; others find caps problematic. For instance, school districts generally have a cap on their tax rate at 20 mills, although a few systems have higher rates. So if growth in property digests are limited, many districts might quickly run up against that 20-mill cap.

One mill is equal to $1 in property tax levied per $1,000 of a property’s assessed value.

Sen. Nikki Merritt, D-Grayson, said local school boards and counties need the ability to make decisions about how to raise the funding needed to educate children and provide government services.

Credit: Arvin Temkar/AJC

Credit: Arvin Temkar/AJC

“The concern is that (school) districts are going to have a hard time keeping teacher salaries in line with inflation,” Merritt said.

Lawmakers from both parties have periodically tried to address rising property taxes.

Democratic Gov. Roy Barnes in the late 1990s passed a “homeowners bill of rights” and a tax credit on property tax bills. When Republicans took over the General Assembly, then-Speaker Glenn Richardson crusaded against rising property taxes — and Republican lawmakers floated the idea of replacing property taxes with higher sales taxes to pay for schools.

A swap from property taxes to sales taxes was first suggested in Georgia in the 1990s, but the idea was criticized as bad for low-income families — who pay a higher percentage of what they earn in sales taxes — and potentially damaging to school systems. Sales tax collections are also seen as especially sensitive to downturns in the economy.

The fate of Hufstetler’s bill is iffy in the House, where the chairman of the House Ways and Means Committee has said he supports local control of local tax decisions. If it does pass, voters would get a say on the issue in a November referendum.

Capitol Recap: The 2024 Legislative Session

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