Will the Georgia Legislature Cap Property Tax Increases?

Published 10:03 am Thursday, January 25, 2024

Staff Reports

By Chris Denson

Perhaps no public policy debate raises the ire of Georgians quite like property taxes.
State legislators often say it is the issue they most frequently hear about from the folks
back home, especially in recent years as the housing market boomed.
It is the issue that my organization, the Georgia Public Policy Foundation, often receives
the most queries about. Typically these come from seniors on fixed incomes.
“Mr. Denson… my ‘fair’ market value that my home was assessed by went up ~37% from my 2021 property taxes.”
Well, this might finally be the year the Georgia legislature provides some much needed
property tax relief: a Senate committee recently held their first hearing on a bill that
would cap the assessed value on a homeowner’s primary residence at no more than a 3%
per year increase.
Escalating property taxes typically come from these assessments, which are also the
least transparent – and most confusing. Fair market value is primarily determined by an
aggregate of local deed transactions over the past year, then projected to anticipate what
the value will be on January 1st.
So not only are long-time homeowners penalized through no fault of their own as
neighboring home prices rise, they are also subject to the perils of economic forecasting.
Now that you’ve got a handle on that methodology, the property is assessed at 40% of
the fair market value to complicate this even more.
Yet, not only would a cap represent a sliver of clarity when it comes to property taxes –
and a heightened ability for those on fixed incomes to plan accordingly – it is important
because the property value assessment only represents one component of property
taxes.
Another component is the millage rate, which is the rate at which the property is taxed
and is determined by the local governing authorities, such as the county commission,
city council, and local school board.

Since these rates are often set by elected officials, they are subject to greater scrutiny
and political pressure by constituents. Plus the state requires these local taxing
authorities to advertise, hold public hearings and explain why they are raising the
millage rate if they wish to do so.
Thus, one intention of this bill is to force any tax increases at the local level through the
front door (millage rate increases) rather than the back (property value assessments.)

Here I should note the final component for many Georgians’ property tax bill: the
plethora of state and local property tax exemptions. Plus many local governments have
already passed referendums to freeze property tax increases for homeowners. This bill is
intended to keep those in place.
One cautionary tale against this type of cap came from the chief appraiser of the
Columbus-Muscogee County Board of Assessors, as their consolidated government froze
homestead increases completely in 1983.
She spoke of how the tax burden has fallen on new homeowners and commercial
property owners. One example was how two homes in the same neighborhood that are
nearly identical and both valued around $300,000 – yet purchased over three decades
apart – resulted in one homeowner that paid $7.19 in property taxes last year, while the
other paid over $3000.
Ultimately, the senators on the committee seemed unmoved by this – many mentioned
positive results after capping property tax valuations in their home counties — and
expressed their willingness to move forward with the bill after a few tweaks to its current
form.
One cruel irony of our current housing market is that rising home mortgage interest
rates has made even the prospect of downsizing more costly, as potential homebuyers
contemplate a higher monthly payment for less home – that is, even if they wish to
move. In a time of inflation, property valuations are one inflationary measure that needs
to be limited.
Chris Denson is the Director of Policy and Research for the Georgia Public Policy
Foundation.