Property tax cap draws flak from cash-hungry cities

Local government officials told state lawmakers Monday that a plan to cap property assessments could shift tax burdens from businesses to homebuyers and people in slow-growth neighborhoods.

But backers of the measure said it would keep local city councils, county commissions and school boards from jacking up taxes merely by raising the property assessments on homes and businesses.

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The plan’s sponsor, Rep. Edward Lindsey (R-Atlanta), told a House Ways & Means subcommittee the current system needs to be junked because it is fundamentally unfair to property owners.

“It’s not whether the governing thinks a tax system is fair or not, it’s whether taxpayers think the tax system is fair,” he said.

Despite the fact that many home values are declining in the recession, Lindsey’s proposal to limit property assessment increases to 3 percent a year is one of the hottest issues at the statehouse.

It also may be one of the first substantial pieces of legislation the General Assembly approves during the 2009 session.

The issue pits the Republican leadership against city, county and school officials who already feel they are getting hammered by state budget cuts this year.

Macon Mayor Robert Reichert, a former Democratic lawmaker, told House committee members, “At least if you’re going to do this, just acknowledge and admit local control is gone.”

Both chambers of the General Assembly approved separate cap measures last year. But the issue died on the final day of the 2008 session.

Lindsey said his plan would eliminate so-called “back door” tax increases.

The value of a piece of property and the tax rate determine how much a homeowner pays in property taxes. Often, lawmakers say, cities, counties and school districts have kept tax rates down but tax bills have still risen because of increases in the assessed value of properties.

John Sherman, president of the Fulton County Taxpayers Foundation, told lawmakers the assessment increases have been a “bonanza” for cities, school districts and counties.

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.

Slowing the flow of revenue would be more bad news for cities such as Atlanta that are already facing layoffs and service cuts because of budget problems.

Opponents are particularly concerned that Lindsey’s bill would limit assessment increases on commercial property as well as homes.

Chatham County, home of Savannah, has long had assessment limits on residential property.

But Michael Brown, Savannah’s city manager, said including businesses like major hotels in the assessment caps would “cripple city government.”

He said much of the extra money raised by higher assessments on commercial property has gone for police improvements.

“The commercial assessment cap will definitely benefit not people from Georgia, not businesses from Georgia, but companies and stockholders from outside the state and the country,” he said.

Local officials said higher taxes on such businesses help keep taxes on homeowners down.

Lindsey said his proposal would force local city councils, school boards and county commissions to “look voters in the eye” and raise millage rates if they want more money.

However, Don Rooks, lobbyist for the Georgia School Boards Association, noted that 29 school systems are already above, at or near the 20-mill tax rate limit, including most in metro Atlanta.

“They have very little room at the top,” he said.

Rooks, who noted that school districts are facing state funding cuts this year, said lawmakers should remove tax rate caps if they approve an assessment cap as well.

But Lindsey said local residents can already vote to allow districts to increase millage rates above the cap.

Sherman of the Fulton County taxpayers’ group warned lawmakers not to be persuaded by opponents who argue that assessment caps aren’t needed because property values are falling.

Sherman said he was a product of the Great Depression. “That [downturn] passed and this one will too,” he said. “If we don’t cap [assessments], we will see another double-digit increase in the future. There is no question about it.”