City Commission considers tax proposals

Decatur’s City Commission will vote tonight on the school board’s proposed property tax millage rate for 2016. The school board previously voted to maintain its existing rate from 2015 of 18.66 mills. Decatur’s charter requires the City Commission to approve the rate proposed by the school board.

The City Commission will also consider calling an election to vote on several proposed homestead exemptions. This is for the exemptions authorized by the state legislature earlier this year for public referendum in November. The ballot measures would include adding a new school exemption for seniors, adding a new city exemption, expanding two existing city exemptions, and repealing a defunct exemption provision.

The meeting will take place at City Hall, 509 North McDonough Street, at 7:30 p.m. with the property tax-related items toward the beginning of the meeting.

City endorses school exemption plan

During their meeting Monday night, the City Commission unanimously approved a resolution supporting the school board’s intentions to exempt homeowners age 65 and older from school taxes. The school system is seeking support from state senators and representatives in the area to carry the proposal forward in the Georgia General Assembly during its 2016 session. Final approval would require a majority vote in a public referendum.

Currently, homeowners become exempt from school taxes in Decatur when they turn 80 if they make less than $40,000 a year. School taxes represent about 60 percent of an average tax bill. I estimate that about 1,000 property owners would qualify for an age-65 school exemption.

Decatur’s combined millage rate OK’d for 2015

The City Commission adopted the millage rate for the school fund last night based on the rate the school board approved last week. Coupled with the June approval by the City of a one mill rate reduction for 2015, the combined property tax millage rate for the City of Decatur and the City Schools of Decatur will be 30.66 mills. In 2014 the combined tax rate was 33.5 mills. The final combined rate reflects an 8 percent rate decrease since last year.

Tax savings or increases will vary based on property values. Here are some sample projections comparing Decatur property taxes for this year and last year for properties with and without the basic homestead exemption.  These are estimates for a full year and exclude fees for stormwater and sanitation which average $315 per home per year.  Any payments made during our first installment billing of 2015 are treated as credits against the total amount owed for the year.

School board approves a rate cut of 1.84 mills

The Decatur board of education approved a 2015 property tax rate of 18.66 mills last week.  The rate is 1.84 mills lower than it was in 2014 (a 9 percent year-over-year decrease), and it is 0.34 mills lower than what the school system's finance department recommended for this year.

The approved rate is higher than the "rollback rate" of 18.1 mills, which is the highest rate that could have been passed to result in an effective tax cut once property values citywide are factored in.  Under the new rate, the school taxes in 2015 for a property valued at $400,000 would be $368 less than they were in 2014.  But given the growth in local property values this year, the decreased tax rate could end up washing out on many tax bills.

Several large school districts in the state, such Cobb County, Gwinnett County, Cherokee County, and Atlanta Public Schools are holding their millage rates steady for 2015.  Muscogee County, Savannah, and Forsyth have adopted millage rate increases.  The Oconee County board of education has approved a decrease, but I'm not familiar of too many other school tax rate cuts at this time.

Decaturish has a good write-up on the school board's decision here.

Per Decatur's charter, the City Commission is required to adopt the levy rate proposed by the school board.  The Commission will take up the measure during their meeting tonight.

Decatur Board of Education to vote on school millage rate tonight

Decatur's school board will consider a 1½ mill decrease in their millage rate for tax year 2015 (their fiscal year 2016) during their regular meeting tonight.  The school millage rate is significant to all local property taxpayers because the school taxes are about 60 percent of your bill.  Under the proposed school millage rate reduction, the property taxes for a $400,000 home in Decatur would be about $300 lower in 2015 than they were in 2014 assuming the property value had not changed and everything else remained the same.

The Board of Education's agenda for tonight includes the following proposal:

Requested Action

Move approval of the Fiscal Year 2016 millage rate of 19.00 mills.

Background

On an annual basis the City Schools of Decatur adopts a millage rate in support of the subsequent year's operating budget. The Superintendent is recommending the millage rate be reduced from 20.50 mills to 19.00 mills for Fiscal Year 2016. It should be noted that last year the Superintendent recommended and the Board approved a reduction in the millage by 0.40 mills. This recommended millage rate of 19.00 mills, if approved would be a decrease to the millage of 1.90 mills over the last two years. This cumulative reduction of 1.90 mills would equate to a loss of revenue to the District in the amount $3.0 million.

Aggregate property tax rates fall in Decatur in 2014

The total, effective tax rate for property owners in Decatur is decreasing by 5.5 percent in 2014 compared to 2013 based on decreases in 1) the Decatur school millage rate, 2) DeKalb’s incorporated millage rate for Decatur, and 3) the State of Georgia millage rate. However, individual property owners’ actual tax bills will vary significantly based on their value assessed by DeKalb County. Bills will also vary on the basis of homestead exemptions and fees.

Here are the details:

1. The property tax millage rate for Decatur’s schools decreased from 20.9 in 2013 to 20.5 mills for 2014. That reduces the combined millage (all city tax rates plus the school rate) from 33.9 in 2013 to 33.5 mills for 2014. 
2. Property owners in Decatur also pay property tax to DeKalb County. (But the bill they pay to DeKalb is about 80 percent less than what property owners in unincorporated DeKalb pay to the County.) The county tax rate for City residents is determined by the DeKalb County Board of Commissioners. During their July 7 meeting, county commissioners approved a reduction in the county millage rate in Decatur from 12.03 mills in 2013 to 9.58 mills in 2014. 
3. The millage rate charged by the State of Georgia, which is collected through county bills, also fell from 0.15 in 2013 to 0.1 in 2014 as part of a five-year phase-out of state property taxes. 

As an example, if DeKalb determined the value for a non-homesteaded property of $200,000, it would have paid $3,390 in City property taxes and $974.40 in County taxes for a total property tax liability of $4,364.40 for 2013. The same property with the same value in 2014 would owe $3,350 in City taxes and $774.40 in County taxes for a total property tax liability of $4,124.40 for 2014.  Here are some more examples comparing properties with different values year-over-year:

Decatur adopts new millage rate for school system

Decatur’s school board voted to lower the school’s millage rate from 20.9 in 2013 to 20.5 in 2014 last month—a reduction of almost 2 percent. Tonight, the City Commission has formally approved the new rate. (The Commission is required by the City's charter to adopt the school board’s proposal).

Together with Decatur’s own 13 mill levy, the approval makes for a combined millage rate of 33.5 for 2014. The combined rate had been steady at 33.9 mills since 2011.

A mill represents one tax dollar per $1,000 of assessed property value, so a four-tenths reduction in the millage rate represents a 40¢ tax reduction per $1,000 of assessed value. In practical terms, this means homes in Decatur would see a reduction of their total property taxes for 2014 of $35 to $80 compared to 2013 if the property value didn't change since last year. Individual tax changes will vary based on assessed value. This chart shows a few examples (assuming the property value is the same in 2014 as it was in 2013):

	Example 1	Example 2	Example 3
100% property appraisal	$175,000	$320,000	$400,000
50% property assessment	$87,500	$160,000	$200,000
2014 city property tax bill	$2,931	$5,360	$6,700
2013 city property tax bill	$2,966	$5,424	$6,780
Year-over-year reduction of…	$35	$64	$80

Homeowners who are over the age of 80 and who make less than $40,000 will not see a change in their bills since they are not currently paying school taxes. Certain individuals over the age of 62 who have low incomes and low assessed values may also be paying little or no school taxes, and will likewise see little or no change in their bills.

In addition to real property, the millage rates also apply to "personal property," which are business inventory taxes, so some local businesses that have no change in their property value will see a slight savings.

The new millage rates will be factored into Decatur’s second installment property tax bills, which will be mailed Oct. 20 and due Dec. 22. Payments made during the first installment this spring are treated as credits against the total year’s taxes.

School millage rates: some up, some down, says GSU

At an Urban Institute conference in late May on the effects of the housing crisis on state and local governments, James Alm and David Sjoquist from Georgia State University gave a presentation entitled “Rethinking Local Government Reliance on the Property Tax.”

Alm & Sjoquist look at national property tax trends for the first half of their slides, but then focus on Georgia as a case study. One of their observations (on slide #22 of their presentation) is this table showing that declining property values have not caused an increase in the number of Georgia school districts increasing their millage rates:

However, it looks to me like an increasing number of school districts are no longer lowering their millage rates.

Their full PowerPoint presentation is available here.

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.

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.