Last week, Chatham County’s tax assessors announced that most properties throughout the county held their value this year despite one of the worst years for home sales in recent memory. While most property owners were expecting their assessed values to decrease, most stayed the same and unbelievably, some increased.
Situations like this were the very reason property taxes were one of the most debated issues during this past legislative session.
Recognizing that property tax assessments were out of control throughout our state, a number of bills were introduced intending to reign in this process. And while some passed and some didn’t, the message from our citizen legislators was clear — tax assessments are out of control, and property owners need help.
HR 1 would have eliminated “backdoor” taxes by limiting property assessments to 3 percent per year or the rate of inflation, whichever is less. Similar to existing laws such as Stephens-Day in Chatham County and Carter-Burns in Effingham County, this statewide bill was intended to stop “backdoor” tax increases where the local millage rate remains unchanged but the assessed value of a person’s property goes up resulting in an increase in the person’s property tax bill.
Because HR 1 dealt with a state tax exemption and would require a constitutional amendment to be voted on by the citizens of the state, it required a two-thirds majority vote of the legislature in order to pass. The final vote fell 15 votes shy of the required 120 in the House needed to constitute a constitutional majority, and HR 1 failed.
Not to be deterred by this failure, HB 233 was introduced that would immediately impose a two-year freeze on property assessments throughout the state. While the bill called for property values to continue to be re-assessed during this time, some argued that this was unnecessary since market values were falling and property assessments would follow suit. (Note: see paragraph one)
Unlike HR 1, HB 233 did not require a two-thirds majority and easily passed and was signed into law by Gov. Perdue earlier this month.
While some have expressed the concern that this two-year freeze will cause widespread increases in property assessments when it expires, look for HR 1 or similar legislation limiting assessment increases to be introduced again in the next two years.
SB 83 was another bill that was introduced during the session that was intended to help property owners by increasing the state homestead exemption from $2,000 to $4,000 per year. Supporters of the bill argued that homeowners were getting a tax increase every year because the exemption had been at the $2,000 level for the past 72 years. They also argued that now was an appropriate time to increase the exemption since the last time it was done was during the Great Depression.
Although SB 83 passed the Senate, in the end, like HR1, it required a two-thirds majority vote and failed to garner the necessary votes to pass the House.
The final bill aimed at helping property owners was SB 55, which would require assessors to consider the impact of home foreclosures and bank sales of comparable real property on property values. It also required consideration of decreases in property values caused by conservation easements.
The intent of SB 55 was to help lower ad valorem tax bills for property owners by taking into consideration these factors that could lower the assessed value of a piece of property. The legislation passed easily and was signed into law by Gov. Perdue.
Although it would have been easy to sit back during these depressed real estate times and let the system continue as is, Georgia’s state legislature remained aggressive in seeking to protect property owners during this past session. And judging from last week’s news from Chatham County’s tax assessors, it’s a good thing we did.