Property tax appeals driving Fulton’s revenue shortfall

Fulton County businesses have won so many appeals of their 2008 property reassessments that the county faces a shortfall of $40 million in tax revenue.

Just 12 months ago, Fulton officials were celebrating their first complete revaluation of commercial property since 1991. Values went up on 87 percent of parcels, and the average jump was 44 percent. Which all added up to millions in new tax revenue for the county.

But the celebration was premature.

Owners of about 9,300 commercial properties — of a total of 23,021 — appealed their new values. The appeals have been so successful that Fulton has lost $4 billion of $6 billion in new value created by the revaluation. And now Fulton’s commissioners are saying that they may sue the company they paid $4.1 million to review all commercial properties.

“The county did not get its money’s worth through this process,” said Commissioner Nancy Boxill.

The board plans a work session in two weeks to discuss how it will balance the books — by raising taxes, cutting spending or both.

Fulton’s financial losses from the appeals are hitting the county two ways.

First, the county began 2009 with thousands of properties and billions of dollars in value still in dispute from the prior year. With so many parcels on appeal, county Finance Director Patrick O’Connor said he decided to be cautious with the 2009 budget. Under his budget assumptions, the county would retain just 72 percent of the new values under appeal, and it would collect just 90 percent of the revenue that would generate. This amounted to about $31 million in new money.

“I thought we were being very conservative,” O’Connor said.

What’s happened has dumbfounded O’Connor and other county officials. Fulton has retained only about 36 percent of the contested value from the revaluation, meaning the $31 million budgeted for 2009 will likely be just $11 million in collections.

Then that $20 million shortfall gets multiplied by two because 2009 tax bills will reflect the same values as the 2008 tax bills.The situation could be further complicated because assessors are in the midst of lowering values for about 150,000 mostly residential parcels. That could mean even lower property tax collections.

Commissioners say they are angry and looking for answers.

“Either the error rate is astounding or the Board of Assessors and the Board of Equalization aren’t doing their job,” Boxill said. “There’s no way we could be losing 70 percent.”

Burt Manning, Fulton’s chief appraiser, said the team from Texas-based Tyler Technologies that did the revaluation improved the county’s commercial tax digest substantially. Still, he acknowledged that numerous mistakes have come to light through appeals.

“The amount of significant errors is more than we would have expected from a revaluation of this type,” Manning said.

He said Fulton has also been pounded on appeals because of the commercial real estate slump that has worsened dramatically since last year. The values are supposed to be based on what a property was worth as of Jan. 1, 2008, not the decline after that date. But Manning said Boards of Equalization can’t help but take the slump into account when hearing appeals.

Ben Story with Tyler told commissioners Wednesday his company did commit errors in the revaluation. However, he didn’t agree that they were significant.