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3% property assessment cap passes in the Georgia Senate

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3% property assessment cap passes in the Georgia Senate

Georgia State Capitol. Photo by Dean Hesse.

Atlanta, GA — The Georgia Senate has passed a bill to cap property assessment increases at 3%.

The bill started as Senate Bill 349 and aimed to put in place a statewide floating homestead exemption to be implemented for counties, cities and schools and limit increases in home values to 3% each year. The cap, however, passed the Senate under House Bill 581 on Tuesday, March 26, with a 52-0 vote. It now goes back to the state House for another vote.

Thursday, March 28, is the last day of the legislative session.

The Senate also passed House Resolution 1022, which would put a property assessment cap in the state constitution, according to the Atlanta Journal-Constitution. If the resolution passes the Legislature, it would be on the ballot in November for voters to approve.

If voters approve the referendum, both bills would go into effect on Jan. 1, 2025.

HB 581 also makes some changes to how local governments have to advertise their millage rates. Under the bill, as long as the millage rate is not increased, only one advertisement and a public hearing would be required to adopt the rate. Currently, local governments have to hold three public hearings if their millage rate is above the state’s rollback rate.

Local governments and school systems could opt out of the statewide homestead exemption under HB 581. If they chose to opt-out, the governing body would have to adopt a resolution, advertise their intent to opt out and hold three public hearings.

The statewide homestead exemption could impact municipalities and school systems, but it depends on the local homestead exemption laws, State Sen. Elena Parent (D- Senate District 42) previously said.

“There is some concern from certain municipalities and school systems that this could cause them to lose some funding that they currently receive, but, if that’s the case, the funding could be achieved by raising the millage rate, unless the cap has been reached,” Parent said.

Homeowners would likely see a lower property tax bill with a cap of 3% on assessments. Property taxes, however, make up a large portion of revenue for local governments and school districts, said Rohan Ganduri, assistant professor of finance at Emory University.

“A large part of the school financing comes from property taxes. If you cap property taxes to 3% and if inflation goes at a much higher rate, the market values in that area go up, and you’re not able to collect enough property taxes then the quality of schooling is likely to go down because those are the taxes that fund teacher salaries, etcetera,” Ganduri previously said.

Decatur Mayor Patti Garrett previously said she has some concerns about a fixed cap on home values.

“A one-size-fits-all blanket limit does not consider the different level of services and costs incurred within particular municipalities and school systems within the state. We would much prefer to see more local control over issues such as tax assessments,” Garrett previously said. “Many cities address assessment increases by increasing homestead exemptions and lowering millage rates.”

A 3% cap on home value increases would also mean school districts could receive less revenue from property taxes, even as the market grows.

While school districts could raise their millage rates, many can only raise their millage rates to 20 mills, although a few districts, like DeKalb County Schools and City Schools of Decatur, have a higher cap or no limit. The DeKalb County School District and CSD have a cap of 25 mills.

Some cities and counties don’t have a cap on their millage rates, so they have other ways to make up revenue if property assessments are capped. The city of Decatur, however, has a cap of 18 mills on its millage rate.

“They can make up that money in different ways than schools districts [can], so it’s a bigger impact on the schools,” said Justin Pauly, director of communications for the Georgia School Boards Association. “School districts are trying to listen to their communities. They understand the challenges for property owners, especially those with limited incomes, and trying to put some things into place or rolling back their millage rate far enough to where they won’t lose equalization.”

According to the AJC, the Senate is also considering House Bill 1019, which would increase the state homestead exemption from $2,000 to $10,000 and lower the taxable value of residential properties. If the General Assembly passes the bill, it will be on the November ballot as a referendum.

That change would only impact taxpayers in about one-third of the state’s counties. The AJC reported that most already have homestead exemptions higher than the standard state exemption.

Decatur and DeKalb County increased their homestead exemptions last year. These exemptions are all higher than the state’s.

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