Senate leaders back effort to limit tax assessments

Georgia House and Senate leaders are now throwing support behind a plan to cap home assessment increases in hopes of holding down property taxes.

The proposal is being called a top priority for the 2009 legislative session, which starts Jan. 12.

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Relief for homeowners, however, could be a long way away. The cap, if passed by the Legislature, would have to be voted on by Georgians in November 2010. And property values are dropping now in some areas because of the housing crisis, so caps might not come into play for some time.

Meanwhile, taxes may end up increasing next year if the same Republican leaders promoting the cap follow Gov. Sonny Perdue’s lead and eliminate a state property tax grant program worth about $200 to $300 to most homeowners.

Rep. Rob Teilhet (D-Smyrna), said politics is behind the Republican push for the assessment cap.

“They (Republicans) are giving themselves cover to raise property taxes,” he said.

Republicans leaders say that’s not so, and they note that each GOP-led chamber approved similar measures during the 2008 session. It ultimately failed in a last-day tax cut fight between House Speaker Glenn Richardson (R-Hiram) and Lt. Gov. Casey Cagle, the Senate’s president.

Senate Majority Leader Chip Rogers (R-Woodstock), said Monday that something needs to be done to slow property tax increases.

“Property owners in Georgia deserve predictability in their property tax bill,” Rogers said. “It is senseless that a homeowner can be sacked with a 50 percent increase in property taxes just because a government bureaucrat claims the home value has increased on paper.

“This is unfair and it must be addressed.”

While legislative leaders have pushed tax reform in recent years, lawmakers head into the 2009 session facing a $1.6 billion to $1.8 billion budget shortfall. That will make it very difficult for them to cut state taxes.

Perdue has put the homeowner relief grant program on hold because of the budget crisis. Lawmakers from both parties say they want to fund it this fiscal year, which runs through June 30, to avoid additional property tax bills being sent out this spring. But they aren’t sure about it next year.

Richardson in particular has been on the warpath against property taxes for years. In 2007 he touted a plan to eliminate all property taxes. When it went nowhere, he backed bills to eliminate property taxes on cars and to freeze assessments.

Those died on the last night of the session.

Two new resolutions to freeze or limit home assessment increases have already been filed for the upcoming General Assembly session.

Rep. Edward Lindsey (R-Atlanta) filed a proposal backed by Richardson and House Majority Leader Jerry Keen (R-St. Simons Island) to cap possible property assessment increases at 3 percent or the rate of inflation.

Rep. Kevin Levitas (D-Atlanta) filed a bill to freeze assessments at the price the homeowner paid for their home.

If a cap passes, it would go before voters in 2010.

The value of a piece of property and the tax rate are components that determine how much a homeowner pays in property taxes. Often, lawmakers say, cities, counties and school districts have held down tax rates but brought in more money each year through increases in the value of properties.

According to state Department of Revenue figures, local government revenue from sales and property taxes jumped to $1,519 per capita in fiscal 2008 from $1,094 in fiscal 2000. State revenue from those sources increased during that period from $601 to $625 per capita.

However, the numbers don’t include what the state gets from income taxes, a major source of revenue. And other studies have shown a smaller gap between the growth in local and state spending.

Proponents of the cap say it would force city, county and school officials to vote on tax increases, a politically unpopular move.

Slowing the flow of revenue could make it tough on some cities that are already facing layoffs and service cuts because of budget problems, such as Atlanta.

Carrollton Mayor Wayne Garner, a former state senator, said, “It would impact their ability to raise revenue. It would be tough on Atlanta.”

But unlike some mayors, Garner, a statehouse lobbyist, doesn’t think the cap is such a bad idea.

“At some point in time, there has got to be some kind of circuit-breaker to stop local governments from growing and growing and growing,” he said.

Gwin Hall of the Georgia Municipal Association said her group thinks local officials should be the ones deciding whether to cap assessments. Some local governments have limits similar to those included in the House proposals.

Hall said there could be a myriad of problems with a statewide cap on assessments. For instance, the legislation would likely allow higher assessments when property changes hands. So people buying homes or businesses would have higher assessments than their neighbors.

Hall said Georgia cities have about $14 billion in capital improvement needs - from roads to sewer projects - over the next five years.

The idea behind the assessment caps, she said, “is to limit the amount of revenue” local governments take in.

“It’s going to make it that much harder to pay for those critical infrastructure needs,” Hall said.