Georgia measure would cap increases in homes’ taxable value to curb higher property taxes
ATLANTA– For Georgians dissatisfied with rising property taxes, lawmakers say they have a solution: placing a limit on how much of a home’s increasing value can be taxed.
With the election underway, voters are deciding on a state constitutional amendment that would limit the increase in a home’s value for property tax purposes to the broader annual rate of inflation.
Proponents say it will protect current homeowners from ever-increasing property tax bills, but opponents warn the caps will unfairly shift the burden to new homeowners, renters and other property owners.
Georgia is one of eight states where voters will decide on property tax measures on Nov. 5, a sign of how rising tax bills are influencing politics across the country.
Most significant is North Dakota, where a referendum is planned stop current property taxes for all purposes except repaying existing debts. Many officials there, including traditionally low-tax Republicans, are fighting the measure, saying such a major change could disrupt essential state and local government services.
There are also questions on the ballot in Florida, Arizona, Colorado, Illinois, New Mexico and Wyoming.
With demand exceeding supply, home prices are rising nationwide, and those higher values may be reflected in higher taxes.
From 2018 to 2022, the total assessed value of real estate in Georgia increased by almost 39%, according to figures from the Ministry of Finance of Georgia. Most governments pocketed the higher revenues without raising tax rates, pushing up worker wages and other expenses. Statewide property tax collections increased 41% from 2018 to 2022.
Lawmakers heard from their constituents and responded with the proposed constitutional amendment. State Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican who helped write it, calls increases based on higher valuations “a backdoor tax increase.”
“I think some of our homeowners, especially the elderly, are being taxed out of their homes,” Hufstetler said. “They no longer even have an income, but their taxes are still sky high.”
The protection would last as long as a person owns their home. When a home is sold, the appraised value is reset to the market value.
Dozens of counties, cities and school systems in Georgia already operate with similar local assessment limits.
There is little opposition, and the first voters interviewed this week were unanimously positive. Brad Turney, who owns an apartment in Atlanta’s Midtown neighborhood, was among the supporters.
“I don’t want it to get out of hand, and I think this could be helpful,” Turney said after voting in suburban Sandy Springs.
But school systems have been wary, warning that the cap could deprive them of needed resources. That’s especially true because most school districts can’t raise property tax rates above a certain level.
To address schools’ concerns, the measure gives local governments and school districts until March 1 to opt out. Anyone who doesn’t would be permanently covered.
“You only have one time to opt out, and then you’re done,” said John Zauner, executive director of the Georgia School Superintendents Association. He expects that many systems could disappear.
Hufstetler said it would be a “mistake” to opt out.
Assessment limits lead to disparities, with people paying higher taxes than their neighbors just because they bought a house later. Audrey Yushkov, a senior policy analyst at the Tax Foundation, warned that the measure could make buying a home more difficult in the future, as new buyers would face higher bills and old owners would have an incentive to move into their current homes. to stay to preserve their property. tax bills low. The Tax Foundation is a Washington DC-based group that has traditionally been skeptical of tax increases.
“There is a lock-in effect for current homeowners and a lock-out effect for new home buyers,” Yushkov said.
These effects are widespread in California, which pioneered an even stricter assessment cap, Proposition 13, in 1978.
Yushkov also noted that higher tax bills would be passed on to tenants, as the amendment does not protect apartments and other commercial properties from higher assessments.
The measure also includes a provision allowing city and county governments to increase sales taxes by one cent for every $1 in sales, replacing property taxes. Hufstetler praised the provision, saying it would allow governments to tax visitors to pay for local services. But Yushkov called it a loser, saying property taxes are more transparent because people get one big annual bill and because services are clearly linked to taxes.