A proposal to raise DeKalb County sales taxes and repave crumbling roads is in jeopardy amid concerns that it could trigger an unintended increase in homeowners' property taxes.
The DeKalb Commission plans to vote on the issue Tuesday, but the board so far lacks a majority needed to approve it.
The 1 percent additional sales tax could have raised about $551 million over five years to pay for road repairs, sidewalks, a government center, parks, a police academy and more. Without the DeKalb Commission's approval, the special purpose local option sales tax (SPLOST) won't move forward or appear on the ballot in November.
Opposition to the initiative hardened Friday when the county's elected leaders learned its passage could eliminate an exemption that saves many residents hundreds of dollars on their annual property taxes. The homestead exemption freeze, which reduces DeKalb property taxes to offset increases in home values, would disappear, according to an interpretation of House Bill 596 from the General Assembly's attorneys.
The legislation wasn’t meant to eliminate the exemption, said Sen. Fran Millar, R-Atlanta. But its wording mistakenly said the exemption would be “tolled” instead of “extended.”
“Nobody wants to kill the tax freeze,” Millar said. “That was never the intent. What we hoped to do was make the tax freeze permanent, so as long as there was a SPLOST, there was a tax freeze.”
The General Assembly can correct the wording during next year’s legislation, but that would be too late to prevent it from lapsing if the SPLOST is approved, he said.
Interim DeKalb CEO Lee May said the county only recently became aware of the problems posed by HB596.
“Until this point, everyone has been progressing under a completely different interpretation of this law,” May said in a statement. “I have notified the county commissioners regarding this new interpretation so they will be informed as they weigh their considerations.”
Countywide, property tax exemptions are estimated at almost $3.3 billion this year, an increase of 12 percent from 2015, according to budget figures. The amount of exemptions has risen with property values, with residential real estate assessments up 7.9 percent this year.
Unless a workaround or compromise can be found, the SPLOST won’t pass.
Commissioner Kathie Gannon said she won’t support the SPLOST if it leads to a jump in property taxes.
“I can’t vote to take away everybody’s tax break. It’s too significant,” Gannon said. “It’s a big disappointment for people. They want their roads fixed.”
The SPLOST would have provided funding to resurface about 417 miles of county roads. DeKalb's budget only pays for about 25 miles of repaving each year.
About $217 million of the SPLOST would have been set aside for road and transportation projects. Another $160 million would have gone to other county infrastructure improvements, and $174 million would have been distributed to city governments.
Commissioners were divided on the SPLOST last week, with some wanting it focused on roads and others supporting a longer list of projects.
Some were holding out hope for a compromise, but that was before they heard news of the potential property tax increase.
“I’m very hopeful and optimistic that we can come to a resolution that’s in the best interest of DeKalb County and the cities,” said Commissioner Mereda Davis Johnson during a Tuesday board meeting. “I think it’s a win-win.”
Now, commissioners are worried about the impact on homeowners’ property tax bills.
“At this point, even if the project list was perfect, bringing this SPLOST forward for a vote in November is irresponsible,” wrote Commissioner Nancy Jester on her blog Saturday. “To go forward would mean a devastating tax increase on 10 years of property value growth that has been shielded.”
If the SPLOST vote fails Tuesday, state legislators and county commissioners could approve changes, build concensus and try to pass it again next year.
Proposed SPLOST spending
Roads and drainage: $162 million
Transportation: $55 million
Fire: $46.7 million
Facilities: $44.3 million
Parks: $34.3 million
Police: $24.2 million
Libraries: $11.3 million
City infrastructure projects: $173.7 million
Total: $551.5 million
Source: DeKalb County
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