In a move aimed at curbing the rise in property taxes, Georgia senators have voted overwhelmingly in favor of Senate Bill 349. This legislation seeks to restrict annual increases in a home’s assessed value for property tax purposes to a modest 3%. Spearheaded by Senate Finance Committee Chairman Chuck Hufstetler, the proposal strives to protect homeowners from soaring property tax bills, especially in the face of stagnant income growth. 

The Legislative Landscape

The State Senate’s approval of Senate Bill 349, with a resounding vote of 42-7, signals a significant step towards reshaping property tax policies in Georgia. The proposed limit of a 3% annual increase in a home’s assessed value would remain in effect for as long as the property owners maintain a homestead exemption, a common scenario for homeowners. However, the ultimate decision rests with the voters, who would need to approve the plan through a November referendum.

The Motivation Behind the Legislation

Senator Chuck Hufstetler emphasizes that the primary goal of Senate Bill 349 is to shield homeowners from the risk of being taxed out of their homes. With property taxes escalating by hundreds or even thousands of dollars, there is a growing concern that individuals’ incomes are not keeping pace with these rising levies. This sentiment reflects a broader nationwide trend, as many states, including Texas, Kansas, Colorado, and Pennsylvania, grapple with addressing voter discontent over escalating property taxes.

Divergent Approaches in the Legislature

While the Senate has rallied behind the 3% cap on assessed home values, the House of Representatives presents an alternative vision for property tax relief. In a unanimous vote of 162-0, House members endorsed a bill that proposes increasing the statewide homestead tax exemption from $2,000 to $4,000. While this move may save some homeowners $100 annually on their tax bills, it does not apply uniformly across counties with existing local homestead tax exemptions. The House, wary of imposing a statewide valuations cap favors allowing local decisions to prevail.

Local Initiatives and Opposition

Notably, 39 Georgia counties, 35 cities, and 27 school systems have already implemented local laws limiting the annual increase in assessed property values. These measures, endorsed by the Association of County Commissions of Georgia, have found favor among some jurisdictions, particularly benefiting homeowners aged 65 or older. However, the Georgia School Board Association opposes the proposed statewide cap, advocating for local autonomy in decision-making.

Potential Impacts on Education Funding

The Georgia School Board Association expresses concerns about the adverse effects Senate Bill 349 could have on education funding. As school taxes constitute a substantial portion of property tax bills, the association argues that limiting the growth in property values to 3% annually might necessitate government entities to raise tax rates to compensate for lost revenue. The bill could pose challenges for school districts, particularly in maintaining teacher salaries in line with inflation.

The Challenge of Tax Rate Caps

While districts can increase tax rates to offset the shortfall in property values, many face constraints due to existing tax rate caps. According to the Georgia School Superintendents Association data, some districts are already nearing or at the maximum allowable tax rate. The potential consequence is that school districts may find it challenging to keep teacher salaries competitive in the face of inflation.

Examining the Numbers

Data from the Georgia Department of Revenue reveals a significant increase in property tax collections, rising 41% from 2018 to 2022. Concurrently, the total assessed value of property statewide witnessed an almost 39% surge. It is essential to note that these figures encompass both existing properties and new constructions, making it challenging to discern the specific impact on the valuations of existing homes.

Potential Disparities and Long-Term Implications

One potential outcome of capping assessed values is the creation of disparities between long-term residents and newcomers. If the proposed caps have a more pronounced effect on values over an extended period, long-time homeowners may pay lower taxes than new entrants. This dynamic is already observable in some Georgia communities that have implemented local caps.

As Georgia grapples with the complexities of property tax reform, the contrasting approaches in the Senate and the House underscore the need for a comprehensive and balanced solution. While the intent behind Senate Bill 349 is to protect homeowners from escalating property taxes, the implications on education funding and the potential disparities between residents warrant thorough consideration. With the November referendum looming, the citizens of Georgia will play a pivotal role in shaping the state’s future of property tax policies.