ATLANTA– With home prices rising, leading to higher property taxes for many Georgia homeowners, there is a groundswell among state lawmakers to provide relief this election year.
Georgia’s Senate Finance Committee plans a hearing Monday on a bill that would limit the increase in a home’s value, as assessed for property tax purposes, to 3% per year. The limit would apply as long as the owner maintained a homestead exemption. Voters would have to approve the plan in a referendum in November.
Meanwhile, Republican House Speaker Jon Burns of Newington is proposing doubling the state’s tax exemption, a measure that would reduce statewide tax bills by nearly $100 million.
But Georgia is far from the only state where lawmakers are responding to voters’ dissatisfaction with higher taxes.
“Property taxes will likely be the biggest tax issue in many states this year,” said Jared Walczak of the Tax Foundation, a tax research group that is often critical of increases.
In Texas, voters in November approved a plan to cut property taxes by $18 billion. Kansas’ Democratic governor and Republican-majority Legislature both support expanded exemptions for homeowners to cut taxes by $100 million annually. Colorado lawmakers, meeting during a special session in November, approved higher home deductions and a lower tax rate. Pennsylvania uses lottery proceeds to lower property taxes and subsidize rent for seniors and people with disabilities.
In Georgia, advocates say a cap on the taxable value of homes would prevent school districts, cities and counties from raising tax revenues by relying on rising values. Republicans have long pushed local governments to roll back tax rates to shore up bills, even requiring ads that billed failure to do so as a tax increase.
Finance Committee Chairman Chuck Hufstetler, the Rome Republican who is sponsoring Senate Bill 349, says many school districts and governments are instead pocketing higher revenues based on value.
“I’ve seen some increases where, in just a few years, their collections have gone up 40%,” Hufstetler told The Associated Press on Friday. “And they haven’t lowered the millage rate and they’re using it to increase the backdoor tax. And I think there needs to be some moderation in that.”
Statistics show that total property tax collections in Georgia increased 41% between 2018 and 2022. During that same period, total assessed property values statewide increased by nearly 39%. These numbers from the Georgia Department of Revenue represent not only existing properties, but also new buildings. So they do not clearly indicate how much valuations for existing real estate have increased.
Many governments and school districts have spent the windfall from rising values on raising worker wages and covering expenses swollen by inflation. A 3% cap could mean governments would have to raise tax rates instead. In states like California and Colorado, property tax limits have been blamed for hampering local governments.
At least 39 counties, 35 cities and 27 school systems in Georgia have already passed local laws limiting how much assessed values can increase, according to the Association of County Commissions of Georgia. Some of those limits only benefit homeowners age 65 or older.
Republican Lt. Gov. Burt Jones supports Hufstetler’s bill, saying it will prevent “major surprise increases in home values.” It is also supported by at least one Democrat, Senator Jason Esteves of Atlanta.
“An important part of this bill is trying to make sure people can stay in their homes,” Esteves said, saying higher taxes will force owners to sell and move.
But state House leaders are reluctant to impose statewide valuation caps, saying the choice should be left up to local communities. Instead, they support Burns’ increased tax exemption.
“Our hope is to maintain local control,” House Ways and Means Committee Chairman Shaw Blackmon, a Republican from Kathleen, said Friday.
Because caps can depress values more the longer a person owns a home, they could result in long-term residents paying lower taxes than newcomers. That’s already the case in some communities in Georgia with local limits.
Suzanne Widenhouse, chief appraiser for the Muscogee County Board of Assessors, told a House committee in October that a homeowner in Columbus paid $7.79 in property taxes last year, while a more recent neighbor in a similar home 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 protected from taxes by homestead exemptions, which do not allow for any appreciation. That shifts the tax burden for commercial and industrial property owners, as well as tenants, Widenhouse said.
“Any time you start restricting values, you create inequality,” Widenhouse said.