Senate votes to double homestead exemption

The Georgia Senate on Friday passed two bills that will force local governments to either raise taxes this fall or dramatically slash spending.

The Senate voted overwhelmingly to double the state’s homestead exemption. And it approved a bill that will assure homeowners won’t get the state-funded tax relief grants this fall.

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Kimberly Smith / ksmith@ajc.com

Senate Majority Leader Chip Rogers (R-Woodstock) holds up three fingers as he reminds colleagues that when it comes to the homstead exemption, ‘It is their house, it is their land and it is their money,’ as he referred to taxpayers receiving an increased exemption. Rogers was speaking during a lengthy and contentious debate Friday.

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Kimberly Smith / ksmith@ajc.com

Sen. Steve Thompson (D-Marietta) called the homestead exemption bill ‘smoke and mirrors’ legislation because local governments will raise property taxes to make up for the lost revenue.

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The Senate voted 40-14 to increase from $2,000 to $4,000 the amount of property value homeowners can exempt from taxes.

The change would save homeowners about $50 to $75 on their taxes this fall, depending on local tax rates and on whether local governments keep those rates the same.

In addition, the exemption would increase each year at the rate of inflation.

The proposed exemption increase, which would be on the ballot in a special referendum in June, is aimed at making up in part for the loss of the homeowners’ tax relief grant this fall. However, it could cost millions of dollars to hold the June referendum.

Senate Majority Leader Chip Rogers (R-Woodstock) said the state homestead exemption has not been changed since it was enacted in 1937. At the time, if you owned the average-priced home in Georgia, you were exempt from all property taxes, he said.

If it had been adjusted for inflation, the exemption would be $33,000 today, Rogers said.

Clint Mueller, a lobbyist for the Association County Commissioners of Georgia, said increasing the exemption will cost local governments more than $100 million in lost tax revenue.

But, Rogers said, “We have thousands and thousands of homes being foreclosed upon, and we have the temerity to say, What about local government? What about the taxpayers? They are the ones that sent us here.”

Sen. Steve Thompson (D-Marietta), called it “smoke and mirrors” legislation because local governments will raise property taxes to make up for the lost revenue.

The bill now moves to the House for its consideration.

The Senate also approved on a 29-24 vote Friday legislation that would essentially guarantee the state won’t fund the homeowners grant — which saves homeowners $200 to $300 a year — this fall. However, the Senate may reconsider the vote Tuesday. The House passed the same bill last week.

The grants cost the state $428 million, and with the recession killing tax collections, the government doesn’t have the money to fund them in the coming year. The legislation sets up a formula to fund the grants in the future if the state tax collections grow. But it’s unlikely the grants will come back until the fall of 2010 or later.

“We understand that state legislators are trying to make up for not being able to fund the HTRG credit this year,” said ACCG Executive Director Jerry Griffin. “But, the savings that they are offering to homeowners will come directly out of local government budgets by increasing the property tax exemption. That shifts the financial burden of a state-funded benefit to local governments who are also dealing with declining revenues.”