SUMMARY:  LC 18 7938S

This legislation proposes a constitutional amendment that would limit the valuation of both residential and nonresidential real property. Valuations could increase no more than the lesser of 3 percent annually or the percent change in the rate of economic inflation; however, because this limitation operates in a cumulative manner, valuations could increase 9 percent in a three-year period.  New fair market valuations would be set for property sold or transferred, but they could not exceed the fair market value.  

REQUIREMENTS:

• The purpose of this legislation is to limit the valuation of residential and nonresidential real property, except for certain allowed adjustments.
• The assessed value of real property for county, municipal, or educational ad valorem tax purposes shall not exceed an aggregate of 9 percent for each three-year period of successive ownership.
• The assessed value shall not exceed from one taxable year to the succeeding taxable year the lesser of three percent or the percent change in the rate of economic inflation as determined by the state revenue commissioner.
• The 3 percent limitation shall operate in a cumulative manner; thus, if an increase in one year is less than 3 percent, then the next succeeding year shall be increased by an amount equal to the difference.
• It shall not be construed from these provisions that the assessed value of property decreasing is prohibited.
• Additions or improvements shall be valued for ad valorem tax purposes at their fair market value and added to the owner's valuation amount.
• The state revenue commissioner shall be authorized to correct any manifest, factual error in the valuation of real property.
• The General Assembly must be authorized by general law to further define and implement these provisions including, but not limited to, the definition of a sale or transfer of real property or interests therein; other circumstances such as rezoning that require a revaluation; the timing of the reassessments as a result of sale, transfer, additions, or improvements; and the definition and methods of determining fair market value as applied to nonresidential real property.
• In determining fair market value, the General Assembly may include -- but must not be limited to -- a formula based on current use, annual revenue, and real property sales data.
• The General Assembly must be authorized to provide by local or general law for base year assessed value homestead exemptions that freeze the assessment of property with respect to any or all ad valorem taxes.
• Any local or general law providing for base year assessed value homestead exemptions that freeze the assessed value of property with respect to ad valorem taxes enacted prior to January 1, 2011, shall be ratified expressly, and such ratification shall not be interpreted to imply that such laws were invalid at the time they became law.
• These provisions shall not apply to any homestead's ad valorem taxes which are the subject of any such general or local law exemption unless such general law or local law is repealed.
• These provisions  shall not apply to real property in any county or any county school district for which a local constitutional amendment has been continued in force and effect as part of this Constitution which imposes millage rate limitations regarding ad valorem property taxes with respect to such real property unless such local constitutional amendment is repealed.
• The General Assembly must be authorized to discontinue these limitations by local law conditioned upon approval by a majority of the qualified electors residing within the limits of a local taxing jurisdiction voting in a referendum thereon.
• The ballot question must read as follows:  Shall the Constitution of Georgia be amended so as to limit increases of real property and to provide for ratification of prior and enactment of new exemptions and assessment freezes?

POINTS TO CONSIDER:

• Many school systems are at or near the millage cap, and this legislation would more severely impact them.
• Assessment limitation benefits go to those whose property increases in value greater than the allowed limit while providing no benefit to those taxpayers whose property value is stagnant or in decline.
• The tax burden does not go away; it is shifted from protected to non protected properties and/or from fast appreciating properties to declining, stable, or slowly appreciating properties.
• Assessments increase most rapidly in fast growing areas which are often considered desirable for several reasons.  The growth leading to the assessment increases usually also leads to increased demands for service, such as more schools.  The limitations imposed by this legislation may make it difficult to accommodate that.
• Resetting values upon owner transfer is in effect a subsidy for existing owners, who will continue to pay less, thus creating if not an equity issue at least a fairness one.
• Assessment limits and revaluation upon sale or transfer will lead to great disparities in property tax bills over time, and newer residents may feel that they are carrying too much of the burden.
• The value of all properties does not rise at the same rate, and the uniform assessment limitation reduces the share paid by property that increases in value rapidly and increases the share paid by those growing slowly or not at all.
• While 10 Georgia school systems have a Local Option Sales Tax (L.O.S.T.), the other 170 systems must rely almost entirely on the property tax as the sole source of revenue to provide services.
• Assessment limits will, in cases where property appreciation exceeds the limit, result in erosion of the property tax base, a decrease in revenues, and reductions in local autonomy.
• Citizens who want property tax relief may not also favor reductions in school services such as elementary art, music, foreign language and physical education.
• Increased local taxes are in many cases caused by cuts in state aid, and further limits on local revenue is not a good response to this situation.
• Local decisions over spending could be significantly impacted by assessment limits.
  
  EFFECTIVE DATE:

January 1, 2011