Bill links revenue, property tax relief

Homeowners likely would see a property tax increase this fall under legislation moving quickly through the state House of Representatives.

The bill, sponsored by House Ways and Means Chairman Larry O’Neal (R-Bonaire) and co-sponsored by most of the House leadership, would obligate the state to pay for property tax relief grants the Legislature gave to homeowners last fall.

But the bill says that in the future, the state would only pay the grants —- which now cost $428 million —- if state revenues grow at least 3 percent plus the rate of inflation.

And, if the money is available, it wouldn’t be allocated until lawmakers meet each year for their annual sessions, which is after tax bills go out.

If the bill passes, lawmakers don’t expect enough growth in tax collections to fund the grant program in fiscal 2010, which begins July 1. “There is almost zero possibility we’re going to fund it next [fiscal] year,” O’Neal said.

Clint Mueller, a lobbyist for the Association County Commissioners of Georgia, said that will mean higher property tax bills for homeowners this fall.

The grants currently save homeowners in the neighborhood of $200 to $300 a year on their property taxes.

O’Neal’s legislation is expected to be approved by his committee today, and it could be on the floor for a vote by the full House as early as Friday.

The grants for this year were included on tax bills that went out last fall.

However, Gov. Sonny Perdue stopped the state from sending counties the $428 million to pay for the grants because state revenues tanked when the recession deepened.

County officials say they will have to send out supplemental tax bills, essentially asking for the grants back, if the state doesn’t release the money.

Perdue cut the $428 million from his proposed budget plan. Lawmakers say they are working hard to find spending cuts so they can repay counties and keep them from sending out the supplemental tax bills.

Under O’Neal’s bill, the state could essentially put part of the $428 million in the budget for fiscal 2009, which ends June 30, and part of it in the next year’s budget. The counties would get their money, albeit divided into two state budget years.

In the future, however, the grants would only be given out in years when the economy is fairly strong.

“If revenue goes down or doesn’t go up by enough, you can’t do it,” said House Appropriations Chairman Ben Harbin (R-Evans), a co-sponsor of the bill. “With the revenues dropping like they have, our hands are tied [this year] because we made the commitment. In future years, you should have the revenue before you pass out grants.”

Not funding the grants next fiscal year will save the state money at a time when lawmakers are grappling with budgets that include more than $2 billion in spending cuts.

House Democrats say they oppose O’Neal’s proposal, arguing that eliminating the grant will bring higher property taxes.

“We made a commitment to homeowners on property taxes, and we need to uphold that commitment,” House Minority Leader DuBose Porter (D-Dublin) said. “It sounds like the [Republican] leadership wants to find a way out, and that would result in raising property taxes on Georgians. If that’s the case, Democrats are opposed to that.”

House Minority Caucus Chairman Calvin Smyre (D-Columbus) said Democrats will propose a constitutional amendment to protect the grants into the future.

“We want this to be in a constitutional amendment so this thing will not be a political football in the future,” Smyre said.

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