Friday, May 28, 2010

State rep calls DeKalb's process "absurd"

On his blog yesterday, State Rep. Mike Jacobs criticized DeKalb County's reassessment notices and offered guidance to property owners who have appealed their property values. Here’s an excerpt:

They’re at it again.

The DeKalb County Tax Assessors have sent out reassessment notices. Having received one this year, and having heard from many of my constituents who have received one, it appears that there is a common thread in this year’s crop of reassessments.

The common thread is that, if you filed a Form PT-50R Georgia Real Property Tax Return (click for an article that I previously wrote on how to file this form), the tax assessors included the amount that you provided on your Property Tax Return as the “previous year’s value” for the bygone 2009 tax year. Then, the assessors increased that amount to what had been your 2009 assessment amount, telling you that the old 2009 amount would be the “current year’s value” for the 2010 tax year.

The rest of Rep. Jacob’s commentary is available here.  The City of Decatur receives all its property assessment values from DeKalb County.

Tuesday, May 25, 2010

Property taxes less popular than income tax

According to an April 2010 compilation of public opinion data by the American Enterprise Institute, property taxes are among the least popular of all taxes, and are perceived as less fair than the income tax. Findings include:
  • “Thirty-six percent in February-March 2003 told Kaiser/NPR/Harvard that local property tax was the tax they disliked the most, followed by 29 percent who chose the income tax.” 
  • “Gallup shows a substantial jump since the late 1980s in the proportion of people mentioning the local property tax as the worst or least fair tax.”
  • The March 2009 Harris/Tax Foundation poll found that 5 percent of people think local property taxes are “very fair,” 6 percent think it’s somewhat fair, 33 percent think it’s fair, 30 percent think it’s somewhat fair, and 25 percent think it’s “very unfair.”

Does this mean that property tax offices are more disliked than the IRS? Gulp.

Thursday, May 20, 2010

Barnes scolds loss of HTRG

In 2009 the Georgia General Assembly passed HB 143, which allowed for the funding of the Homeowner Tax Relief Grant for 2008 (which lowered the most Decatur homeowners’ tax bills by $252) but denied funding for 2009. Locally, this resulted in an effective tax increase of $252, although the Decatur City Commission simultaneously increased a low income, senior exemption which reduced taxes by $230 for qualified homeowners. HB 143 left the door open for funding the exemption in future years if state revenues increase 3 percent above inflation.

Former governor and gubernatorial candidate Roy Barnes has come out with an ad criticizing the legislature and the current governor for not funding the HTRG saying:

As Governor, we increased the homestead exemption to give everyone a property tax break. But the politicians under the gold dome took away our tax cut. So our taxes went up but the taxes of the special interest went down. That's not right and it's not fair and when I'm Governor, it won't stand.

Morris News Service reports that the ad is running in Savannah, Macon, Augusta, and Albany.

Tuesday, May 18, 2010

More Georgia school boards balance spending cuts and millage rates

While Muscogee and Chatham County school districts are considering property tax hikes to deal with thorny school budgets, DeKalb County is looking at spending cuts instead.

The AJC has reported that in DeKalb, “The tax rate will remain at 22.98 mills, which is the third highest in Georgia for schools, board chairman Tom Bowen said.” Budget savings will include 289 cut jobs, bigger class sizes, teacher furloughs, and a pay cut for the county school board.

According to the Times-Georgian, Douglas County is also looking at teacher furloughs and a hiring freeze, although Douglas hasn’t ruled out a change to their millage rate.

Thursday, May 13, 2010

It’s official: Governor signs HB 1055

Gradually over the next five years, Georgia property owners will see the state’s portion of their county property tax bills eliminated. Like I projected before, this will save the typical owner about $30 a year once fully implemented. Since counties are responsible for collecting the state’s portion, City of Decatur residents will see no change to their city tax bill, but will see their DeKalb County tax bill lowered. This all assumes that there is no legal challenge to the law due to the lack of a fiscal note being attached to the bill during the legislative process. 

Here are the details from BusinessWeek:
Georgia Gov. Sonny Perdue has signed legislation that would increase dozens of Georgia user fees and slap a new tax on hospitals to help balance the state's struggling budget.

The legislation Perdue signed Wednesday would also cut taxes for property owners and upper-income senior citizens.

"Signing this bill ensures a balanced budget and lays the groundwork for economic recovery," the Republican governor said in a statement.

The tax cuts would phase in over five years and were tacked on during this year's legislative session to give some GOP legislators cover to vote for a controversial proposal to tax hospitals on their revenue. The additional money from the 1.45 percent tax on hospital revenue is to be funneled to Medicaid.

Lawmakers were struggling to close a $785 million budget shortfall for the fiscal year that starts July 1. It follows 15 months of plunging revenues.

Perdue had pushed both tax cuts in past years without success. Together, they'll mean the loss of $387 million in revenue when they are fully phased in by 2016.

The approved property tax cut would eliminate the state portion of property taxes. Perdue's office said savings would amount to roughly $31.50 a household…

Tuesday, May 11, 2010

Property taxpayer news

The special election to fill state Senate District 42 is today. Decatur News Online has been covering the candidates’ positions including what their budget priorities would be during an era of dwindling tax revenues.

For his advocacy of SB 346, state Sen. Chip Rogers has been named legislator of the year by Georgia Property Taxpayers Committee. GaPTC also named Rep. Ed Lindsey.

In a class action securities fraud case, Countrywide has agreed to a $600 million settlement for misrepresenting the quality of its loan portfolio to investors. Until collapsing during the nationwide mortgage meltdown and being taken over by Bank of America, Countrywide was the biggest mortgage lender in America.

Proposition 13, California’s landmark 1978 measure that capped property tax assessments, and arguably inspired legislative reform proposals nationwide and in Georgia over the last several years (such as HB 233, HR1, and SB 346), is undergoing new scrutiny by lawmakers in Sacramento. Some critics have blamed property tax reforms for California’s fiscal problems.

Monday, May 10, 2010

Lawmakers tout assessment reform

Early on during the 2010 legislative session, SB 346 faced opposition from some officials about allowing year-round assessments. Their argument was that it would be too difficult to budget for when you have an unknown number of people who could appeal their value at any given time. But after scrapping that part of the bill, the Senate passed the bill unanimously.

The House wasn’t completely satisfied with the language in the bill that came over to them. They cleaned up the legal wording, inserted clauses to encourage electronic notices of assessment, and changed the Senate’s proposal for property value arbitration. An overwhelming majority of representatives (137 to 7) voted for the House substitute.

Now, any initial disagreements appear to be water under the bridge as state legislators head back home to highlight legislative accomplishments during the 2010 session, especially SB 346. Here’s a sampling of what state legislators are telling their voters:

Sen. Bill Heath (R-Bremen) declared, “Georgia’s property owners triumphed with the overwhelming bi-partisan support of Senate Bill 346.”

Rep. Lee Thompson (D-Lawrenceville) announced to his constituents that SB 346 passed and “is aimed at protecting taxpayers from unfair assessments and guaranteeing the right to appeal.”

Sen. Chip Rogers (R-Woodstock), the architect of SB 346, calls it “a point of pride.” The Marietta Daily Journal reported, “Rogers said a point of pride is his Property Tax Assessment and Appeals reform bill, Senate Bill 346, which is aimed at ensuring all Georgia properties are properly assessed at fair market value and that property owners have guaranteed rights to appeal. Rogers called it the most sweeping overhaul of the Georgia property tax system in decades.”

Rep. Barbara Macey Reece (D-Menlo) used nearly identical language as Lee Thompson (I think this must come from some type of press release template) saying, “Lawmakers gave final passage to comprehensive property tax reform legislation April 29. SB 346 is aimed at protecting taxpayers from unfair assessments and guaranteeing the right to appeal. The bill requires that every property owner receive an annual Notice of Assessment that includes the estimated property tax and expands the appeal time from 30 to 45 days. All relevant sales, including distress sales, must be included when determining Fair Market Value.”

Rep. John Lunsford (R-McDonough) said, “In an effort to give greater rights to our property owners and to expand those rights, the legislature passed Property Tax Reform, Senate Bill 346. This bill will protect taxpaying property owners by guaranteeing their right to appeal assessments and protecting them from unfair tax assessments.”

Sen. Tommie Williams (R-Lyons) said, “SB 346 revises numerous provisions relating to real property tax assessments and appeals and is considered to be the most sweeping overhaul of Georgia’s property tax system in decades.”

But not all reviews have been so positive. As noted earlier, some property taxpayers themselves have been more skeptical about the provisions of the bill. Also, Brett Harrington, an appraisal professional and blogger at Taxing Issues, has expressed concerns that SB 346 may not be “pro-taxpayer.” In response to my comment about SB 346’s requirement to fix the purchase price of a property as its property value for tax purposes for one year, Harrington noted:

Regarding the purchase price requirement, I agree, it could be significant. However, I am not 100% sure it is entirely taxpayer friendly. In some respects it places an emphasis on the purchase price, which can be problematic. This has been the case in places like CA & OH. When it comes to commercial/industrial transactions, the purchase price is not always the best indicator of market value for property tax purposes.

I believe the annual notice requirement is a favorable requirement. However, I think that changing/eliminating the “annual return” requirement would be much better. Taxpayers can file a return annually to initiate an appeal, but most taxpayers do not know this. What about eliminating the return requirement and allowing taxpayers to appeal after they receive their tax bills? Not only would it provide the opportunity to appeal, it would also be more cost and time effective for the municipalities.

Harrington concluded that, “Overall, in my opinion, this bill constitutes tweaks far more than reform.”

Friday, May 7, 2010

Different counties, different sales tax rates

The Atlanta Journal-Constitution ran a lengthy piece on sales tax collections yesterday. They concluded with this handy rundown on sales tax rates in the metro Atlanta area and what they’re based on:

Paying the pennies

Here are the 1-cent state and local sales taxes charged in five metro Atlanta counties, plus Atlanta. Everyone pays 4 percent to the state, and local governments may add sales taxes of their own. A LOST is a local-option sales tax, and a SPLOST is a special local-option sales tax, which may be used for specific purposes such as building schools or roads. SPLOSTs may end or be replaced by other SPLOSTs, so these figures may change over time. Bear in mind that each county or city tax will go up another penny if voters approve the transportation tax in 2012.

Atlanta — 8 percent

4 percent local (the same three taxes as DeKalb or Fulton, plus a 1 percent sewer tax) and 4 percent state

Sales tax on $50 pair of shoes: $4

DeKalb County – 7 percent

3 percent local (education tax, a homestead tax and MARTA) and 4 percent state

Total sales tax on $50 pair of shoes: $3.50

Fulton County – 7 percent

3 percent local (education tax, LOST and MARTA) and 4 percent state

Total sales tax on $50 pair of shoes: $3.50

Clayton County – 7 percent

3 percent local (education tax, SPLOST and LOST) and 4 percent state

Total sales tax on a $50 pair of shoes: $3.50

Cobb County – 6 percent

2 percent local (education tax and SPLOST) and 4 percent state

Total sales tax on $50 pair of shoes: $3

Gwinnett County – 6 percent

2 percent local (education tax and SPLOST) and 4 percent state

Total sales tax on $50 pair of shoes: $3

Thursday, May 6, 2010

Millage rates & public hearings

Under certain circumstances, Georgia law requires public hearings before a change to the property tax millage rate can be adopted. News from Muscogee County (Columbus, Ga.) provides a good illustration of this. Muscogee’s school board, which oversees one of the biggest school districts in the state, recently proposed a millage rate increase of 1 percent.

If the Muscogee Board of Education had decided to keep total school tax revenues constant, they would have had to lower their millage rate (assuming their total property values have increased since the prior year’s digest). In that case, they could have simply adopted the lesser millage rate at any public meeting.

But if a taxing authority (school board, county commission, city council, etc.) decides to increase the millage rate, as in the case of Muscogee, or even hold the rate steady (which would lead to an increase in total taxes if total property values had risen), then they must hold three public hearings to give taxpayers a chance to speak their minds. That’s why Muscogee’s school board has already scheduled and advertised three meetings.

You may wonder how total property values can increase in the midst of a statewide freeze. Well, the freeze does not apply to new property developments and improvements to existing property. That means that city and county values could rise leading to roll-back rates that would require taxing authorities exceeding the roll-back rate to hold three public hearings first.

Judging from comments on the Columbus Ledger Enquirer about the Muscogee school board’s decision, many taxpayers down there will take advantage of the opportunity to participate in those hearings!

Chatham County (including Savannah), which also runs one of the biggest school districts in the state, is also considering a millage rate increase for its school system.

Tuesday, May 4, 2010

Income tax assistance

The IRS has announced that 200 of its “taxpayer assistance” centers will be open for special hours from 9 a.m. to 2 p.m. on Saturday, May 15 “to provide help to small business owners and individual taxpayers dealing with notices and payments, return preparation and a variety of other tax issues.” (Hat tip to Tax Policy Blog for announcing this.)

It might be a good idea to arrive early because the IRS’s press release says that “two-thirds” of taxpayers who showed up to their last Open House were assisted. I suppose the other third were either too late or turned away?

Anyhow, the closest IRS location to Decatur will be in downtown Atlanta at 401 W. Peachtree St. NW (ZIP code 30308) at the Peachtree Summit Building. (Other Georgia locations are listed here.)

For parking, it looks like the parking deck at 384 Peachtree Street is your best bet, or just ride to the Civic Center MARTA station.

Monday, May 3, 2010

Feeling under-taxed?

State lawmakers passed a little noticed measure during the final days of the 2010 legislative session that would allow state income taxpayers to donate as much as they want into the state’s general fund. Filers have become used to seeing options to donate to earmarked funds like the Georgia Wildlife Conservation Fund and the Georgia Cancer Research Fund. For the first time, House Bill 1272 will allow general contributions beyond what your tax amount due.

The Athens Banner-Herald wrote a harsh rebuke of the bill on their editorial page today partly on the grounds that taxpayers would have no clear indication of what purpose their donation is actually funding.

Nonetheless, the measure obtained bipartisan support in the General Assembly, passing 145 to 6 in the Georgia House (including yea votes by Decatur-area representatives) and passing unanimously in the Georgia Senate. The legislation says that, “it is the policy of this state to enable and encourage citizens voluntarily to support the general welfare of the state.”