State Supreme Court ruling calls local government fees into question

A Georgia Supreme Court decision has cast doubt on whether local governments can charge fees for some services and how those services will be paid for in the future.

On Wednesday the court ruled that Chatham County’s fire protection fee is an illegal tax because it is not based on the value of property. That means Chatham will pay about $30 million in refunds and interest to property owners.

The ruling immediately calls into question the legality of local fire fees in a handful of other Georgia counties. But its impact could be much broader.

Clint Mueller, deputy director of the Association County Commissioners of Georgia, said local governments now are scrambling to determine what other fees might be affected. If more fees are deemed illegal, local governments will have to find other ways to pay for those services. Mueller said property tax increases are the likely alternative.

“It’s going to create more discussion among the public — how do you want to pay for your government services?” Mueller said. “We’re not going to get rid of government services.”

The move comes as property tax relief has become a top issue in the General Assembly. Earlier this year, lawmakers approved $850 million in property tax relief that will filter down to homeowners in the form of lower bills.

Republicans also pushed through a plan that would allow local voters to approve new sales taxes to offset city and county property taxes for homeowners. They said it was needed to provide relief to taxpayers who have seen rising property tax bills in recent years. Democrats called it a “bait and switch” that would benefit wealthy homeowners at the expense of low- and middle-income Georgians, who pay a higher share of their income for groceries and other necessities that include sales taxes.

That debate likely will continue in the legislative session that begins in January. Wednesday’s Supreme Court ruling could complicate those discussions.

Chatham County charges a fire protection fee in unincorporated areas consisting of flat per-parcel charge or a charge based on the square footage of structures. The court held that the way the charge is structured makes it a property tax under Georgia law. And as a tax, it must be based on the value of each property, the court held.