This is the first of a four-part explanatory article on the new Georgia property tax law, HB 581, enabled by the referendum on Georgia’s November ballot that passed and enabled it.

This installment focuses on the general terms of the law, and how it affects Cobb County and its cities. The second installment will cover the decisions that need to be made by the county and its cities (and the timetable). The third will go into more depth on the effects on residents’ tax bills, and the fourth will address the optional FLOST (see below).

The Cobb County Board of Commissioners and representatives of the county’s cities heard a presentation and asked questions about the changes to Georgia’s tax code passed by the Georgia House and Senate, signed into law, and enabled by voters in November’s statewide referendum (Amendment 1).

Cobb Chief Tax Assessor Stephen White and Dante Handel, the Associate Director of Governmental Affairs for the Association County Commissioners of Georgia, gave the presentation and answered questions posed by local officials.

Background

House Bill 581 created a floating homestead exemption as a default for governments that receive property tax revenue. If the local government does not opt-out, the homeowner knows the assessed value of their home may not increase by more than the inflation rate, which prevents large jumps and helps them budget.

A floating homestead exemption increases the value of an exemption to offset inflation.

The ACCG gives the following example:

If a property had a taxable value of $100,000 and the taxable value increased the following year due to market changes to $110,000, then the exemption ‘floats’ to be worth $10,000 of taxable value so the taxpayer still pays on the original base year value of $100,000.

Cobb County already has a floating homestead exemption, as do all the cities in Cobb except Austell and Mableton (Mableton doesn’t fund itself through property taxes).

If Cobb County and its cities do nothing, the new law’s provisions will go into effect. If Cobb and its cities opt out of the provisions in the law, the existing Cobb taxation rules will remain in effect.

The county and cities have until March 1 to opt out, but since three advertised public hearings are required before a county or city can opt out, the decision has to be made in January as a practical matter so that the hearings can be advertised and

The bill also creates a process for creating a new sales tax called the Floating Local Option Sales Tax (FLOST). It is available to counties and cities that do not opt out of HB 581 and is intended to offset any drop in revenue caused by the floating homestead exemption. The FLOST requires a referendum.

Follow this link to read a copy of the bill as passed and signed into law.

Presentation by Stephen White and Dante Handel

After introductory remarks from Cobb County Manager Dr. Jackie McMorris and BOC Chairwoman Lisa Cupid, Stephen White began the presentation by answering a few of what he described as the most common questions asked by taxpayers.

The first question was “Does this mean my property tax bill will only go up a small portion each year.”

White said yes, “If your taxing authority does not opt out.”

He said a close second for most frequently asked question was “Does this affect my school tax exemption?”

“No,” White said. “If you have school tax exemption, this does not affect it in any way. You are school tax exempt, regardless of HB 581.”

“How does this affect the current homestead float in Cobb County?” was the next most frequently asked question White addressed.

“There is no effect to the float that we have in Cobb County as well as our cities, because the law allows for the jurisdictions to choose whichever one is better,” White said. “Our current float, that we have in Cobb County and in the cities, is a total freeze on the value.”

“So, that is better for the taxpayer,” he said. “So the float program that we have for the general fund in Cobb County does not change, is not affected.”

The next question White said he had frequently received was, “Why is the tax estimate on the Assessment Notice going away?”

“The estimate is going away, because many cities around, Georgia, have Homestead floats, and many counties were having difficulties getting that float information,” White said. “We didn’t really have that problem here in Cobb County, we were working with many of you cities on, getting your flow data and that was working quite well for us.”

“But again, that document is a promulgated document that exists in 159 counties, and many counties were having problems,” he said. “The taxpayer would get that, that estimate, and it would be wrong already because they don’t have the floating information. So that’s why the estimate is going away. Because many counties were having difficulties with getting accurate information on there.”

White said Austell is the only city in Cobb that has a millage rate but does not have a homestead float. He turned the question of how Austell will be affected over to Dante Handel.

“Every jurisdiction is automatically getting this floating homestead exemption applied as of January 1st of next year unless they opt out.” Handel said. “Should the governing authority of Austell still want to opt out, they need to run three, advertisements, hold three public hearings and pass a resolution affirmatively opting out which they must file with the secretary of state by March 1st.”

Handel then addressed how Mableton will be affected, since that city does not levy a millage. He said that Mableton will be in the floating homestead exemption program unless the city opts out by March 1. If Mableton levies a millage rate in the future, the city will automatically have that floating homestead exemption applied to them.

For further information

Ballotpedia ran a description of HB 581, and the November referendum results that enabled it.

You can read HB 581 as it was passed by the House and Senate and signed into law here.

Although the bill is complex, before the general election, Decaturish published an informative article on the intent and nuts and bolts of the law.

The Association of County Commissioners of Georgia and the Georgia Municipal Association ran a Frequently Asked Questions (FAQ) sheet explaining Georgia HB 581.

Watch the video of the presentation here