Lawmakers consider limiting property taxes as Georgia home values rise
A for sale sign by owner sign hangs in front of a house in Mastic, New York, on January 14, 2018. (Photo by Steve Pfost/Newsday RM via Getty Images)
ATLANTA - With a runup in home values sparking higher property taxes for many Georgia homeowners, there is a groundswell among state lawmakers in this election year to provide relief.
Georgia’s Senate Finance Committee plans a hearing on Monday on a bill limiting increases in a home’s value, as assessed for property tax purposes, to 3% per year. The limit would last as long as the owner maintained a homestead exemption. Voters would have to approve the plan in a November referendum.
Meanwhile, Republican House Speaker Jon Burns of Newington proposes doubling the state’s homestead tax exemption, a measure likely to cut tax bills by nearly $100 million statewide.
But Georgia is far from the only state where lawmakers are reacting to voter discontent over higher levies.
"Property taxes are likely to be the biggest tax issue in many states this year," said Jared Walczak of the Tax Foundation, a group that researches taxes and is often critical of increases.
In Texas, voters in November approved a plan to cut property taxes by $18 billion. Kansas’ Democratic governor and its Republican-majority legislature are both endorsing larger exemptions for homeowners to cut taxes by $100 million annually. Colorado lawmakers meeting in a November special session approved higher residential deductions and a lower assessment rate. Pennsylvania is using lottery proceeds to cut property taxes and subsidize rent for seniors and people with disabilities.
In Georgia, supporters say a cap on homes’ taxable value would keep school districts, cities and counties from increasing tax revenues by relying on rising values. Republicans have long pushed local governments to roll back tax rates to keep bills level, even requiring advertisements labeling a failure to do so as a tax increase.
Finance Committee Chairman Chuck Hufstetler, the Rome Republican sponsoring Senate Bill 349, says many school districts and governments are instead pocketing higher revenues based on value.
"I’ve seen some increases where, just in a couple of years, their collections have gone up 40%," Hufstetler told The Associated Press on Friday. "And they haven’t dropped the millage rate and they are using it for a backdoor tax increase. And I think there needs to be some moderation on that."
Statistics show overall property tax collections rose 41% from 2018 to 2022 in Georgia. During that same period, the total assessed value of property statewide rose by nearly 39%. Those Georgia Department of Revenue figures represent not only existing property but also new buildings. So they don’t clearly state how much valuations rose on existing property.
Many governments and school districts have spent the windfall from rising values to increase employee pay and cover inflation-swollen expenses. A 3% cap could mean that governments would have to raise tax rates instead. In states including California and Colorado, property tax limits have been blamed for hamstringing local governments.
Already, at least 39 Georgia counties, 35 cities and 27 school systems have adopted local laws limiting how much assessed values can rise, according to the Association of County Commissions of Georgia. Some of those limits only benefit homeowners 65 or older.
Republican Lt. Gov. Burt Jones is backing Hufstetler’s bill, saying it will prevent "large surprise increases in home values." It’s also supported by at least one Democrat, Atlanta Sen. Jason Esteves.
"A key piece of this bill is trying to ensure that people are able to stay in their home," Esteves said, saying higher taxes are forcing owners to sell and move.
But state House leaders are cool toward imposing valuation caps statewide, saying that choice should be left to local communities. They instead back Burns’ increased tax exemption.
"Our hope is to preserve local control," House Ways and Means Committee Chairman Shaw Blackmon, a Republican from Kathleen, said Friday.
Because the caps could hold down values more the longer someone owns a home, they could result in long-term residents paying lower taxes than newcomers. That’s already the case in some Georgia communities with local caps.
Suzanne Widenhouse, chief appraiser of the Muscogee County Board of Assessors, told a House committee in October that one Columbus homeowner paid $7.79 in property taxes last year, while a more recently arrived neighbor in a similar house paid $3,236.19. That owner would have paid more except for a $950 million property tax rebate championed by Gov. Brian Kemp.
More than $2 billion in property value in Columbus is shielded from taxation by homestead exemptions which don’t allow for any rise in value. That shifts the tax burden on commercial and industrial property owners, as well as renters, Widenhouse said.
"Any time that you start capping values, you create inequality," Widenhouse said.