Hinesville City Council members agreed to opt in to a state provision to lighten property owners’ tax burden.
Under the provisions of House Bill 581, passed across the state last year, local governments can opt in to a homestead exemption for property owners. With that, they also can put before local voters instituting a sales tax of up to an additional penny, and the proceeds from that tax can be used only for property tax relief.
“It’s an additional penny that by law has to be used to offset the tax obligation in your millage,” said Jimmy McDonald, a local attorney who has helped craft legislation at the General Assembly.
Whatever the floating local option sales tax penny collects, the millage rate must be reduced by the amount collected in property taxes through the millage. Kim Ryon, the city’s chief financial officer, estimated the FLOST could cut as much as 5 mills from the millage rate for homeowners.
There are more steps to take, McDonald and City Manager Kenneth Howard pointed out. The county, which already has the Kemp-Deloach-Williams Act in place, must opt in before a sales tax referendum can be put in front of voters this November.
Should the county also decide to opt in — an entity has to declare it is opting out; otherwise, it is considered to have opted in to the HB 581 provisions — the city and the county have to enter into an intergovernmental agreement on a FLOST referendum and on how to split potential proceeds.
“The city could not move forward with the penny without the county,” McDonald said.
The KDW as it is known locally limits the amount a property assessment can rise in value from year to year from either the consumer price index or 3%, whichever is lower. Once that property is sold, though, the new base year is goes into effect, as does a new assessment.
“That’s been in place in the county for a long time,” McDonald said.
The city does not have the KDW, but opting in to HB 581 in effect provides the same kind of homestead exemption.
Entities that levy an ad valorem tax — such as cities, counties and boards of education — have until March 1 to declare if they are opting out of the HB 581 provisions. The Liberty, Long and Bryan boards of education have indicated they are opting out, as have many school systems across Georgia.
Macon-Bibb County undertook this measure several years ago, and it has reduced significantly the burden placed on local property owners, McDonald pointed out. It’s worked so well that state Rep. Shaw Blackmon (R-Warner Robins), the chairman of the state House Ways and Means Committee, proposed doing the same thing on the state level to his fellow legislators.
The bill passed both chambers of the General Assembly with almost no opposition.
Lawmakers, McDonald added, saw the pattern of assessed values across the state going up substantially over the last five years. While understanding the need of local governments to generate revenue, they also wanted to alleviate the burden on property owners.
McDonald also noted that Hinesville’s population swells during the day as people come in for work or to shop, so more than just Hinesville residents will be paying into a potential new sales tax.
“Using a penny for this purpose distributes the tax across the people who come into the city every day,” he said.
Even if the county does opt out — and if commissioners decide to do so, they must hold three public hearings and send in their formal declaration to the secretary of state’s office by March 1 — and even without a FLOST, Hinesville property owners can expect a property tax break under HB 581. The homestead exemption still will go into effect.
“If you get a tax bill from the city or the county, you will get some relief,” McDonald said on the prospect of the county also opting in.
If the county opts in and a FLOST is passed, homeowners could receive a double benefit, Ryon noted.
“They would get the 581 exemption and the city and they would receive a reduction in their millage rate,” she said. “They are taxed on less value and a lower millage. It would be significant. For all property owners, they would receive reduction in millage rate. There would be considerable savings to the homeowners on their taxes.”
Under the law, the HB 581 provisions last for five years across the state. It can be renewed at the local level through local legislation passed at the General Assembly.