A key Georgia Senate committee backed a measure Friday aimed at slowing the rate of property tax hikes especially prevalent in metro Atlanta by limiting how much home assessments can go up each year at 3%.
Senate Bill 349 by Senate Finance Chairman Chuck Hufstletler, R-Rome, was passed without debate after initially facing some opposition from local government and school groups, which have a stake because limiting assessments may mean they have to raise tax rates to bring in more money to pay for government services.
The bill’s passage through the Senate Finance Committee came a day after the House passed legislation to double the standard state homestead exemption on property from $2,000 to $4,000 a year, a measure the chamber’s leaders said could cut property taxes by $100 million a year.
Both efforts are aimed at helping homeowners who, in some areas, have complained about being taxed off their property as assessments have skyrocketed with the booming housing market even as tax rates have remained stable.
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.
“We’ve probably heard more about property taxes than we’ve heard about any other issue in the past year,” Hufstetler said at a recent meeting.
Lt. Gov. Burt Jones, president of the Senate, praised passage of the measure.
“Senate Bill 349 addresses longstanding problems with local property taxes, including large surprise increases in home values and a confusing appeals process,” he said.
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.
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.
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.
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.
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