Georgia’s “Taxpayers Bill of Rights” fails to protect
Early next month, the Clarke County city of Winterville will hold three public hearings prior to adopting its 2005 property tax (millage) rate. The hearings are required by the Taxpayers’ Bill of Rights (TaBoR) law adopted in 2000.
The TaBoR requires cities, counties and school boards to hold the hearings and advertise an “Intent to Increase Taxes” when they choose to adopt a millage rate that exceeds the “rollback rate,” which is the previous year’s millage reduced by the same percentage by which the Net Tax Digest grows as a result of increases in the assessed value of existing properties.
The law, pushed by then-Governor Roy Barnes, was intended to protect property owners from “back door tax increases” resulting from rising property values. In other words, the millage rate should be lowered to offset the “creep” in the values of existing properties, arguably to make the “creep” revenue-neutral to government and, more importantly, mitigate increases in individual tax bills.
Winterville doesn’t plan to raise its millage rate– the city will adopt the same rate as it did in 2004. Even so, Winterville will be one of hundreds of Georgia cities, counties and school boards which will maintain a millage rate that may take more money from Georgia taxpayers than is necessary to fully fund their budgets.
Wintervilleâ€™s plan highlights the ineffectiveness of the TaBoR law and the necessity of a law that simply requires taxing authorities to â€œdo the math.â€
A failed attempt to control taxes
The weaknesses of the TaBoR are easy to understand. First, the “rollback rate” is based on the previous year’s adopted millage. Because Georgia law does not require taxing authorities to calculate the millage correctly, there is no guarantee that last year’s rate was mathematically correct. Our research has identified taxing authorities from across the state whose arbitrary and inflated millage from last year remains too high even after a rollback this year. A rollback does not necessarily protect taxpayers from continued and systematic overtaxation.
Conversely but of less immediate concern to the taxpayer, the rollback could actually produce a millage rate that is insufficient to fully fund the taxing authority’s budget. Our research has also identified jurisdictions that are experiencing annual deficits as a result of tax rates set too low.
Second, the TaBoR does not even require elected officials to roll back their millage rate! Taxing authorities willing to weather the political fall-out, if any, from advertising a “tax increase” and holding public hearings can adopt a rate that fails to protect taxpayers from high tax bills resulting from the “creep” in property values– the primary goal of the Taxpayers Bill of Rights law.
Finally, the foundational flaw in the TaBoR is the fact that it does not require taxing authorities to calculate the millage rate correctly. There is only one way to calculate the millage rate; rates derived by any other means are arbitrary and have absolutely no mathematical connection to the budgets that the rates are adopted to fund. The millage rates adopted by over nine out of 10 Georgia cities, counties and school boards either OVERtax or UNDERtax the property owners within their jurisdiction– it HAS to be one or the other.
Dodging the political ‘bullet’
A final requirement of the TaBor for jurisdictions refusing to roll back the millage is that the taxing authority must issue a press release explaining the “tax increase.” The language of the release is, for the most part, mandated by Georgia law. Some cities, counties and school boards that have chosen to adopt the previous year’s rate go to great lengths to skirt the intent, if not the requirements, of the TaBoR and thereby, hopefully, avoid a political backlash.
For example, the Clayton County School Board added this to the required publication this year:
In approving its 2005-06 Fiscal Year Budget, the Clayton County Board of Education will not be raising the millage rate. However, the district will be holding its rate at the existing 18.916 mills and will not employ a roll back rate. Because of this, the district must hold a series of three public hearings to offer county residents an opportunity to comment.
The language that is used in the above press release is mandated by Georgia state law and gives the impression that all citizens in Clayton County will experience an increase in their school taxes. It is important that residents understand that the school district is not seeking an increase in the millage rate as assessed to the countyâ€™s taxpayers. Should any taxpayer experience an increase in their school taxes, more than likely it is due to the fact that their propertyâ€™s value has been increased to more properly reflect its market value.
Once again, Clayton County Public Schools is not seeking an actual increase in the millage rate. The school tax rate will remain at the same level it has held for the third consecutive year, 18.916 mills. Clayton County citizens will continue to pay one of the lowest school tax rates in the Metro Atlanta area for quality educational services. [emphasis added]
Whether or not the Clayton BoE or any other jurisdiction has, by adopting last year’s millage rate, not “raised taxes” may be a matter of semantics. What is indisputable and mathematically provable is that, by refusing to roll back the rate, taxing authorities fail to pass to the taxpayer the benefit of the growing tax digest in the form of a lower millage rate and, thereby, a lower tax bill.
Moreover, the adoption of the previous year’s rate is proof that the taxing authority did not “do the math” and adopted an arbitrary rate that has no mathematical connection to its budget. By adopting an arbitrary rate, such taxing authorities are either OVERtaxing or UNDERtaxing the property owners within its jurisdiction– it MUST be one or the other.
The “Taxpayers Bill of Rights” fails to protect Georgia’s property owners from arbitrary and capricious tax rates adopted by ill-educated elected officials. The rollback provision of the TaBoR should be repealed and replaced with a requirement that Georgia’s cities, counties and school boards simply “do the math.”
Winterville to hold property tax hearings
Winterville will hold a trio of required tax-rate hearings beginning Thursday.
The Clarke County city’s property tax rate for 2004 was 2.9 mills – a bill of $116 a year for the owner of a $100,000 house – and is not expected to change.
Increased property values mean the government will collect 5 percent more revenue, though, and state law requires city officials to call that a tax increase and hold public hearings. The hearings will be held at Winterville City Hall and are scheduled for 5:30 p.m. Thursday, 5:30 p.m. Tuesday, and 7 p.m. Oct. 11.