Two tax measures on Georgia’s ballot

Tuesday’s election will include two ballot questions related to taxes in Georgia.

The first is a proposed constitutional amendment that would limit Georgia’s top marginal income tax rate to 6 percent. The tax rate has been steady at 6 percent since 1969 by statute, but this change would enshrine the rate in the state constitution. Supporters say the amendment would help attract businesses to Georgia by giving them additional confidence that the tax rate would not increase, while opponents say the cap would restrict Georgia’s ability to increase revenues if needed. The wording of the question is “Shall the Constitution of Georgia be amended to prohibit the General Assembly from increasing the maximum state income tax rate?”

The second tax question is a statewide referendum that would clarify that state university-owned student housing and parking decks leased and managed by private contractors would always retain tax-exempt status. Government property is almost always tax-exempt. The question reads, “Shall property owned by the University System of Georgia and utilized by providers of college and university student housing and other facilities continue to be exempt from taxation to keep costs affordable?” The Georgia Policy and Budget Institute’s Wesley Tharpe laid out the pros and cons of this proposal to The Marietta Daily Journal, saying:

"(The proposal will) allow Regents to reduce the nearly $4 billion in debt that it has accrued over time as a result of what some have described as overbuilding,” Tharpe said. “This could help free up the university to sell additional bonds at a better rate for other projects in the future. “The potential downside is that there are no restrictions explicitly spelled out in the legislation as to how much private companies will be able to charge for rent,” he continued. “The university system claims that it will still have the ability to regulate and limit student housing costs over time, but it is still somewhat of an open question since those rules are not laid out in the proposal."

State lawmakers question officials on development authority tax breaks

Concerned about the impact on school funding, a joint study committee of state legislators convened Thursday for a hearing on the procedures, reporting, and effects of special property tax arrangements with Georgia businesses.

Many development authorities throughout the state have tax-exempt status if their charters establish them as the equivalent of government entities. When those development authorities buy properties, those properties maintain tax-exempt status even when the development authority enters leasehold agreements with private entities such as manufacturing plants. These payment-in-lieu-of-tax (PILOT) agreements are usually designed to provide for economic development by incentivizing companies to stay, relocate to, or expand in Georgia. Generally, as bonds are paid off, the amount of the exemption provided to the company subsides over time until the property is eventually 100 percent taxable again.

One of the factors behind the creation of the joint study committee was a significant error in how one PILOT was reported to the state. Troup County made arrangements with the local Kia Motors plant to accept payments in lieu of taxes several years ago. Due to a mistake in how Kia’s property value was classified in the county’s consolidated digest sheets, the state paid less funds to the Troup County school system than it otherwise would have for 2012. (Apparently, mis-categorizing the PILOT value as taxable rather than as exempt gave the appearance of Troup having a larger overall digest value thereby reducing the state’s calculation of the county’s effective millage rate and the amount of money granted to them in Equalization funding, which is designed to benefit poor or rural counties with relatively smaller tax bases.) During the 2014 legislative session, lawmakers agreed to pay $1.7 million to the Troup County board of education based on a recalculation factoring in the proper PILOT values.

The downstream effects of such PILOT arrangements and calculations on school funding was of particular concern during the hearing to committee member Sen. Lindsey Tippins (R-Marietta), who emphasized the need for standardization to ensure that schools are included in the abatement process and that they are “made whole” for the foregone revenue.

A PILOT deal can have a compounded effect on school funding because it doesn’t just reduce the school district’s local property tax revenues, but it affects some of the state’s funding formulas for money granted to the schools. According to state deputy school superintendent Scott Austensen who testified before the committee, PILOTs don’t affect Quality Basic Education (QBE) funding because they are treated by the state as local exemptions, but PILOTs do affect Local Fair Share and Equalization funding.

But assuming that PILOT property values are calculated and reported correctly, PILOTs may actually help school districts with certain types of state funding. Rep. Mike Dudgeon (R-Johns Creek), vice chairman of the House education committee, noted during the hearing that a local PILOT would increase the amount of money paid out by the state in Equalization funding, and Austensen agreed. Dudgeon proposed assigning a special code on consolidated digest sheets for PILOT properties so that those values would be easier for state and school officials to monitor.

Sen. Hill called upon Capitol staffers to synthesize recommendations made during the meeting for discussion at a future hearing which has yet to be scheduled, but needs to take place before the end of the year according to the resolution that created the committee.

Business personal tax bills online for 2014

The 2014 bills for Decatur’s business personal taxes are now online. Your business can search, view and print your bill at www.decaturgatax.com. Credit card payments are accepted online with a 2.2 percent plus 30-cent third-party processing fee. You can pay by check or cash if you prefer. You will receive your paper bill next week.

These bills are generally based on the value of your business inventory such as merchandise, office or work equipment, and furniture. Over 400 local businesses are subject to this tax for 2014.  This is not a tax on buildings or land. Assessments are based on the value you reported to DeKalb County. If you didn’t report a value, DeKalb County determined the value for you. The deadline to file a return with DeKalb County stating your value was April 1, 2014. You can check with DeKalb for assessment policies going forward.

Taxes are owed to DeKalb County and to the City of Decatur separately. The taxes must be paid for the full year regardless of any change in the residency of the taxpayer or disposition of the property that occurred after Jan. 1, 2014. The taxes cannot be pro-rated or waived even if your business has closed. Decatur's payment deadline is normally December 20, but since that falls on a Saturday this year we will accept payments until December 22, 2014.

6 percent of Decatur businesses renewed online

From October 2013 through June 2014, 6 percent of businesses renewed their Decatur license by paying their occupation tax online. Of the 1,485 businesses that paid occupation taxes during that time period, 87 of them used our website at www.decaturgatax.com/businesslicense.

That is already a higher rate of web payments than we receive for property taxes (which is about 2 percent of payments made), even though there is more awareness of our property tax website since it has been available for four years. This fiscal year we anticipate a higher percentage of online business license renewals because of 1) increased marketing and awareness of the website, 2) the affidavit upload field on the website is no longer a required field, and 3) we are having some upgrades made to the website.

Attorneys will receive their annual occupation tax bill at the end of this month, and businesses will receive their license renewal bills later in November.

Tax office open on Columbus Day

While the post office, state agencies, and most banks will be closed, City Hall will be open for business as usual on Monday, October 13. City Schools of Decatur and DeKalb County offices will be open as well.

Joint study committee hearing on property taxes scheduled

The impact of property tax digests on local education funding in Georgia will be the subject of a public hearing at the State Capitol on October 23. State Sen. Jack Hill (R-Reidsville) and Rep. David Knight (R-Griffin) will co-chair the meeting and receive testimony from Ellen Mills at the state Department of Revenue along with officials from the Department of Audits and the Department of Education. The meeting will take place from 10:00 a.m. until noon in room 450 of the Capitol.

This will be the first of at least three public meetings of a joint study committee of five state senators and five state representatives. The committee was created with the passage of Senate Resolution 875 earlier this year and will be dissolved after their work is done before December 31. The committee will produce a report for review by the 2015 session of the Georgia General Assembly, and could form the basis of new legislative proposals.