FOR IMMEDIATE RELEASE – February 26, 2009

Contact: Senator Tim Golden @ 404-656-7580 or tim.golden@senate.ga.gov

Contact: Senator Doug Stoner @ 404-463-2518 or doug.stoner@senate.ga.gov

Passing the buck to local governments is not ‘tax relief’

By Senator Tim Golden & Senator Doug Stoner

It seems that hardly a day goes by during the current legislative session without a majority of either the Senate or the House of Representatives passing legislation that claims to help Georgia taxpayers but in reality merely passes the buck to the local level of government.

Artificial, one-size-fits-all proposals like these provide great political theater but little or no actual tax relief. While our property tax system needs some reform, after much thought and deliberation, we have come to the conclusion that HB 233 is another unfunded mandate that simply forces local governments to either raise millage rates, and/or reduce vital services and lay off employees, including the law enforcement and public safety officers who protect us every day. This restriction on local control would especially hurt our already underfunded public schools.

In the state legislature, we are presently dealing with a $3 billion budget deficit of our own. Yet the majority seems to think we have all the answers and the time to micromanage the finances of 159 county governments, more than 500 city governments and 180 local school systems.

We do need to deal with rising property taxes in a responsible way. State government has actually been a big part of the problem – especially when it comes to shifting the burden to the local level. By handcuffing local governments through drastic funding cuts and unfunded mandates, the state has practically guaranteed that property taxes will go up, and go up they have. 

In the past six years, this administration and legislative leadership has reduced Quality Basic Education (QBE) funding to our local schools by nearly $1.6 billion. Class sizes and local property taxes have both increased as a result. In his proposals for the fiscal year 2009 supplemental budget and the 2010 annual budget, the governor is recommending QBE cuts totaling another $400 million. The governor calls these “austerity” cuts, as if our local boards of education have been wasting state public school dollars all these years. But there is nothing austere about merely shifting the responsibility of educating our children from one level of government to another.

Meanwhile, the governor has already signed into law legislation that will protect the Homeowner Tax Relief Grants – for the current fiscal year only. Starting next year, these grants, which have provided true and appropriate tax relief since 1999, will in all likelihood be gone. Again, homeowners will have to pay the bill for this state action, to the tune of $200-$300 per year on the average.

HB 233 does nothing to address these shifts of the tax burden from the state to the local level. Therefore, it offers little to no actual tax relief. Freezing assessments may be good politics, but in the current economy it is not likely that property values would be rising that much anyway.

One of the most important, but less mentioned, drawbacks of HB 233 is its potential to create an unfair disadvantage for new Georgia businesses. Because commercial property reassessments would be frozen for existing businesses, the loss in revenue would have to be made up by new businesses that come into our state, purchase and improve property.

This type of inequity has had such a chilling effect on new business in South Carolina, where reassessments are capped, the economic development community in that state is asking lawmakers to revisit the issue. There is legitimate concern that if HB 233 becomes law, new businesses would think twice before coming to Georgia and creating jobs because of the immediate tax disadvantage they would face.

There is certainly nothing wrong with property assessment freezes or caps per se, but these are the kinds of decisions that should be made at the local level, through local legislation. What is good for Fulton County might not work in Echols County, and vice versa. To think otherwise does a disservice to all property owners.

It is also unclear whether HB 233 is actually constitutional. Some have argued that we would need to change the Georgia Constitution to impose this freeze on the local level. Maybe we need to slow down on the number of mandates (and the number of tax bills that are for show) we pass on to local government and actually take some time to work with the county commissioners, city council members and school board members to enact true property tax relief, rather than simply passing the buck.

HB 233 offers no guarantee of tax relief because it does not address millage rates. In seeking to end the so-called back-door tax increases identified with the reassessment process, we need to consider how certain proposed “solutions” would cause higher taxes to go through the front door.

• Sen. Tim Golden (D-Valdosta) represents the 8th District and is Chairman of the Senate Democratic Caucus.
• Sen. Doug Stoner (D-Smyrna) represents the 6th District and Vice Chairman of the Senate State Institutions & Property Committee.