Soaring Georgia home values have raised real estate taxes by 41% since 2018

The Georgia Senate Finance Committee has scheduled a hearing on Monday to discuss a bill that would limit annual increases in a home’s value, as assessed for property tax purposes, to 3%. This limit would remain in effect as long as the owner maintains a homestead exemption. The plan would need to be approved by voters in a November referendum.

Meanwhile, Republican House Speaker Jon Burns of Newington is proposing to double the state’s homestead tax exemption, a move that is likely to reduce tax bills by nearly $100 million statewide.

However, Georgia is not the only state where lawmakers are responding to voter dissatisfaction with higher taxes.

“Property taxes are expected to be the major tax issue in many states this year,” said Jared Walczak of the Tax Foundation, a research group that often criticizes tax increases.

In November, Texas voters approved a plan to cut property taxes by $18 billion. Kansas’ Democratic governor and Republican-majority legislature are both supporting larger exemptions for homeowners to reduce taxes by $100 million annually. In a special session held in November, Colorado lawmakers approved higher residential deductions and a lower assessment rate. Pennsylvania is using lottery proceeds to reduce property taxes and provide rent subsidies for seniors and people with disabilities.

In Georgia, proponents argue that capping the taxable value of homes would prevent school districts, cities, and counties from increasing tax revenues based on rising values. Republicans have long urged local governments to reduce tax rates to keep bills steady, even requiring advertisements to label any failure to do so as a tax increase.

Chuck Hufstetler, the Rome Republican who is sponsoring Senate Bill 349 and serves as the Finance Committee Chairman, stated that many school districts and governments are using rising values as a backdoor tax increase.

“I’ve seen some increases where, in just a couple of years, their collections have gone up 40%,” Hufstetler told The Associated Press. “And they haven’t lowered 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 that overall property tax collections in Georgia increased by 41% from 2018 to 2022. During the same period, the total assessed value of property statewide rose by nearly 39%. These figures from the Georgia Department of Revenue include not only existing property but also new buildings, so they do not clearly indicate how much valuations increased for existing property.

Many governments and school districts have used the increased revenue from rising values to raise employee salaries and cover expenses inflated by inflation. A 3% cap could mean that governments would need to raise tax rates instead. Property tax limits in states like California and Colorado have been criticized for hampering local governments.

Currently, at least 39 counties, 35 cities, and 27 school systems in Georgia have implemented local laws limiting the rise in assessed values. Some of these limits only benefit homeowners aged 65 or older.

Republican Lt. Gov. Burt Jones supports Hufstetler’s bill, stating that it will prevent “large surprise increases in home values.” The bill also has the support of at least one Democrat, Atlanta Sen. Jason Esteves.

“A key aspect of this bill is to ensure that people are able to stay in their homes,” Esteves said, noting that higher taxes are forcing homeowners to sell and move.

However, state House leaders are not enthusiastic about imposing valuation caps statewide, arguing that this decision should be left to local communities. They instead support Burns’ proposed increased tax exemption.

“Our hope is to preserve local control,” said House Ways and Means Committee Chairman Shaw Blackmon, a Republican from Kathleen.

Since the caps could result in long-term residents paying lower taxes than newcomers, as the value of a home would be held down more the longer someone owns it, some Georgia communities with local caps already exhibit this disparity.

In October, Suzanne Widenhouse, the chief appraiser of the Muscogee County Board of Assessors, testified before a House committee, highlighting the inequity in property taxes. She cited an example where one Columbus homeowner paid $7.79 in property taxes last year, while a recently arrived neighbor in a similar house paid $3,236.19. The latter owner would have paid even more if not for a $950 million property tax rebate supported by Gov. Brian Kemp.

In Columbus, more than $2 billion in property value is shielded from taxation due to homestead exemptions that prevent any increase in value. This places the tax burden on commercial and industrial property owners, as well as renters, according to Widenhouse.

“Whenever you start capping values, you create inequality,” Widenhouse said.

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