Summer Certainties:  Hot Weather And Property Tax Increases

Courier Herald column for the week of July 9th:

My calendar says we’re now squarely into July, and it’s time for a seasonal adjustment.  In Georgia, this means complaints should now focus on two distinct areas:  the oppressive heat, or property tax increases. Tis the season, or something.

The truth is, there’s not much any of us can do about either. It’s also somewhat futile to try and explain the weather other than to say “It’s summer, it does this every year, and why are you acting surprised by this?”.  Property taxes, however, have a bit more background and nuance, at least as far as understanding why things are the way they are.

Property taxes are solely a function of local tax revenues.  The state quit taking a cut of your property tax bills decades ago.  Note to those of you who want our tax structure to be more like Texas: Their legislature is in a special session trying to figure out how to lower Texans’ property tax burden, which is roughly double what an average Georgian pays.

Back here in Georgia, property taxes are set by multiple authorities that will differ slightly depending on where in the state you live.  In all locations you will have a county government and a local school board, each wanting their take.  If you live within a city, that’s another level of taxing authority added to your bill, though you’ll also get a credit from the county for the services that the city provides to avoid duplicate charges. 

Each county has a tax assessor who is responsible for setting the value of each property.  The total value of all properties is known as the “tax digest”.  The board of education, county, and city if applicable each decide on their budget for the year, then divide that among all the property owners to determine their share of the total tax bill for each property.

This is all relatively mundane and boring until the values of properties start to increase rapidly, and/or the amount of the actual tax bills increase.  When these notices begin to flow from the assessors, or the follow up bills come from the tax commissioners, then we’re in full complaint season.

While it varies from jurisdiction to jurisdiction, and property owner to property owner, it seems property tax bills are going up across the board.  Rapidly increasing home values have equaled rising assessments, but city, county, and school board budgets are increasing too.

Roughly a quarter century ago, Georgia’s legislature passed the “property tax bill of rights” which included a provision that taxing authorities must either roll back the millage rate to adjust for increases in assessments, or must notify the public that they are increasing taxes.  Commissions, councils, and school boards are often reluctant to vote for tax increases, especially in Republican controlled areas.  Yet, inflation doesn’t just impact the properties being taxed, but the cost of delivering government services like police, fire, and education.

While it’s easy to complain about the ever increasing cost of government, and the burden that places on homeowners, there should be some empathy for those elected to fund the delivery of local services.  They have to determine how much of a pay raise to give police and firemen who are also trying to put food on their families’ tables with ever increasing costs. 

It’s not only more difficult to recruit new hires for all positions, but employee retention is a real problem as well.  With today’s strong job market, workers are increasingly willing to change jobs or even careers to ensure their paychecks keep up with the cost of living.

This, of course, puts local governments in a bind.  They can either tax in order to keep up with the cost of doing business, or let the quantity and/or quality of services offered decline in an effort to keep the budget low.  The taxpayer solution is always “cut the fat” but, unfortunately, most governments don’t have a department of fat, making this line item ever elusive when the budget ax arrives.

“But other governments aren’t raising taxes, why is my county government?”  Well, the state gets more than three quarters of its budget from income taxes and sales taxes.  The revenue generated from these sources automatically increases with inflation.  As wages and the price of goods rises, so do the revenues from taxing these items at predetermined rates. 

Thus, like the summer heat in July, property tax increases are somewhat baked in.  Does it mean that each increase is justified or the amount is only what is necessary?  Absolutely not.  But to determine that, each voter would have to – and should – pay attention to what is happening at their local level.  Just understand the realities inherent within the system to better target criticisms and complaints.

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