Georgia senators want to limit how much home valuations can rise for tax purposes to keep property taxes in check heading into an election year.
The state Senate voted 42-7 on Thursday to pass Senate Bill 349, which would limit home value increases in property tax assessments to 3% a year. This restriction lasts as long as the owner maintains the homeownership exemption, which typically lasts as long as the homeowner owns the home.
Voters must approve the plan in a referendum in November.
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“This is to protect people from having taxes taken from their homes,” said Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican who proposed the bill. “Their incomes often don’t go up as much as taxes go up by hundreds or thousands of dollars.”
Property taxes have been a hot topic for many Georgia lawmakers this year, as they face complaints that their bills are steadily rising along with home prices. And it’s not just Georgia where lawmakers are responding to voter dissatisfaction with the levy hike; states such as Texas, Kansas, Colorado and Pennsylvania have seen the issue take center stage over the past year. It becomes.
However, it is unclear whether the Senate’s approach will pass, in part because the House has a different property tax reduction plan.
Home for sale in Kennesaw, GA on February 1, 2024. On February 15, 2024, the Georgia Senate passed a bill that would limit the amount of increases in real estate values for tax purposes in order to slow the increase in real estate values. Fixed asset tax. (AP Photo/Mike Stewart, File)
Earlier this month, House members voted 162-0 in favor of a bill that would increase the statewide housing tax exemption from the current $2,000 to $4,000. This could save some homeowners $100 a year in taxes, but it does not apply in some counties that already have local housing tax exemptions. It’s unclear how many homeowners the measure will benefit.
Key House members said they do not intend to impose a cap on valuations statewide, instead allowing such decisions to be made locally. Another bill moving forward in the House would allow him a 3% value cap in any county without introducing additional legislation.
Georgia Republicans have long urged local governments to lower taxes to keep bills at the same level, even requiring ads that say they will raise taxes if they don’t do so. Supporters argue that capping the taxable value of homes would prevent school districts, cities and counties from relying on rising prices to increase tax revenue.
“If we were to raise taxes now, we would have to do it through the front door, not the back door,” Hufstetler said.
At least 39 counties, 35 cities and 27 school systems in Georgia have adopted local laws that limit the amount of increases in assessed values, according to the Georgia Boards Association. Some of these restrictions only benefit homeowners who are 65 years of age or older.
The county commission supports the plan, but the Georgia State Board of Education opposes it, saying it should be a local decision. For most taxpayers, school taxes represent the largest portion of property taxes.
Many governments and school districts have used profits from rising prices to increase employee pay and cover expenses that have increased due to inflation. The 3% cap could mean the government would have to raise tax rates instead. In states like California and Colorado, property tax limits have been criticized for holding local governments back.
“Their concern is that it will be difficult for school districts to keep teacher salaries in line with inflation,” said state Sen. Nikki Merritt, D-Lawrenceville, who opposed the bill.
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School districts can raise tax rates to compensate for the loss in property value growth, but most districts cannot raise tax rates beyond a certain level. According to data kept by the Georgia School Superintendents Association, some school districts are already at or near the tax rate cap.
Statistics show that Georgia’s overall property tax collections increased by 41% from 2018 to 2022. During the same period, the total assessed value of real estate across the state increased by nearly 39%. These Georgia Department of Revenue numbers represent new construction as well as existing properties. Therefore, it does not clearly state how much the appraised value of existing homes has increased.
Caps can suppress the value of a home the longer you own it, meaning long-term residents may end up paying less in taxes than newcomers. That’s already the case in some Georgia communities with local caps.
