Homeowners could lose property tax grants

Legislative leaders are finalizing a plan that would essentially force cities, counties and school boards to make a choice in the upcoming fiscal year: cut spending or raise property taxes.

Legislation filed earlier this week would make it unlikely the state will fund the $428 million property tax grant this fall. The grant would only be funded in the future in good economic times.

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However, House and Senate leaders said Wednesday they would make up the loss of $200 to $300 a year in property tax grants to homeowners by increasing the amount of property value they can exempt from taxes.

Doing so would probably provide local governments with less tax revenue in slow economic times.

Local officials were immediately skeptical of proposal.

“We would oppose that,” said Clint Mueller, lobbyist for the Association County Commissioners of Georgia.

But lawmakers say the grant program has become a subsidy for local governments, something the state can’t afford now that the economy has tanked.

“Local government has the same ability as the state and federal government: they can reduce spending or raise taxes,” said House Majority Leader Jerry Keen (R-St. Simons Island). “They have the ability to do both. And we’re not limiting their ability to do either.”

The bill on the homeowners grant is tied to another piece of legislation capping potential property assessment increases at 3 percent a year. Both bills could be voted on in the full House on Friday. And both could end up forcing spending cutbacks or local property tax increases.

Keen said the cost of the homeowners tax relief grant — which flows from the state through counties to homeowners — has increased from $83 million in fiscal 2000 to $428 million this year.

According to state Department of Revenue figures, local government revenue from sales and property taxes rose to $1,519 per capita last year from $1,094 in 2000. State revenue from those sources increased during that period to $625 per capita from $601.

Lt. Gov. Casey Cagle, the Senate’s president, said both the homestead exemption and the proposed cap on property assessments could be placed on the ballot this November in a special election.

But House leaders are looking into whether they could approve the homestead exemption increase without putting it on the ballot, meaning it could go into effect more quickly.