Decatur School Board, committee discuss options to reform senior tax break
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This story has been updated.
By Sara Amis, contributor
Decatur, GA — The City Schools of Decatur Board of Education met with the Senior Homestead Tax Exemption Committee on Oct. 27 to discuss options for the proposed senior homestead tax exemption based on an analysis from Georgia State University.
The existing exemption, which was created in 2016, was expected to cost the school district an additional $1.2 million per year over existing exemptions; however, it cost an extra $3.5 million in reduced revenues in 2019, and an estimated $5.7 million in 2020.
In order to make up the shortfall, the district raised the millage rate from 18.66 to 20.25 and reduced some services.
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The current exemption will automatically sunset at the end of 2021. The CSD Board formed a committee to come up with alternatives that would reduce the cost of the exemption to the district while preserving as much of the tax break as possible. The solution the committee proposed was to create two new exemptions: one a needs-based exemption for seniors aged 65-69, and another with no income restrictions for seniors aged 70+.
“We wanted to figure out how to create an exemption that still offered the maximum amount of benefit to seniors in Decatur, while protecting those who have needs-based requirements, but in aggregate cost no more than $4.3 million [combined with other existing exemptions],” said committee member Hans Utz. (Editor’s note: Hans Utz writes for Decaturish.com.)
Georgia State’s analysis assumed that the tax digest for Decatur would continue to grow at a rate of 7% annually, which is consistent with historical growth. One scenario is based on the number of exemptions growing at the same rate which Utz described as possible but rare.
At that rate of growth, the assessed value of a home that would be exempt is $160,000. Seniors aged 70+, and those between 65-69 who earn $90,000 per year or less, who have homes that are appraised at $320,000 or less would not pay any school taxes.
The other scenario is based on the number of exemptions growing at a slower rate of 4% annually, which Utz described as consistent with previous years. In that case, $220,000 of assessed value ($440,000 appraised value) would be exempt and the income cap for ages 65-69 would be $65,000 per year.
The original analysis assumed that the millage rate would decrease over time; however, due to uncertainty caused by the pandemic, the Board requested that GSU’s new analysis assume that the millage rate would remain at 20.25.
The Board and committee discussed the possibility of lowering the income cap in order to maximize the amount of exemption offered.
Committee member Paula Collins stated that $65,000 per year is close to 100% of adjusted median income for a two-person household in the Atlanta metro area. Phil Cuffey, another committee member, said that the AMI for a four-person household in Decatur is $92,900.
“I don’t know how the rest of the board feels, but when I see $90,000 I don’t think needs-based. Most of the seniors we are in touch with don’t bring in anywhere near that amount,” said School Board member Tasha White.
Paula Collins stated that 80% of AMI was the standard used for affordable housing.
School Board member Heather Tell expressed concern that expanding the exemption amount might cost the school district more year over year. Utz said that the parameters of the calculations would keep the exemptions within the budget, but that other variables such as how much of the exemption was allocated to each age group might shift.
People who spoke during the public comments portion of the meeting were primarily focused on questions of income. Michele Ritan asked if the committed had considered a maximum amount of taxes that an individual should pay as a percentage of income. Utz said that getting at that number was difficult, but that the combination of a needs-based requirement and an exemption for the value of a home up to a certain amount had substantially the same effect.
David Draper, another commenter, stated that because AMI is based on everyone’s income, he didn’t think that lowering the income cap would make that much difference in the exemption amount for senior homeowners.
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A commenter named Terry said that he had just turned 65 and would be going on Social Security.
“I just got a 62% increase on my property taxes. I’m going to be paying $600 a month just in property taxes. I’m having to think about leaving Decatur because that’s 25% of my Social Security,” he said. He said that the assessed value of his home had gone from $123,000 to $204,000.
“In any of the scenarios we are laying out today, the full value of your home would be exempt for school taxes,” said Utz. “The good news is that the way that we’re trying to structure the 65-69 is specifically meant to help individuals such as yourself.”
Board and committee members discussed the different scenarios in terms of growth of the exemption, and expressed caution in view of questions about the future.
School Board member Tell pointed out that the pandemic has affected not just Decatur’s economy but the economy of the state. Budget cuts on the state level meant that the district had to dip into reserves to make up a $5 million shortfall.
“There’s so much uncertainty right now. I feel like we need to be conservative at this juncture,” said Tell.
School Board member White suggested that the board wait for the forthcoming numbers from GSU about how many people will be affected and what lowering the income cap would do.
Committee member Collins suggested asking GSU what impact assuming growth of the exemption between the low end of 4% and the high end of 7% would have.
The board and committee will meet again in a work session to determine exact numbers based on GSU’s recommendations and 80% of adjusted median income before the regular board meeting on Nov. 10.
School Board chair Lewis Jones thanked the members of the Senior Homestead Tax Exemption Committee for their work.
“I feel so good about where we are in terms of having a good, smart proposal that really achieves what we hoped to achieve here,” said Jones.
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