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State budget spat could force delinquent tax notices on landowners

POSTED: January 28, 2009 12:33 a.m.

The Association County Commissioners of Georgia brought out a new weapon in what is shaping up to be a battle royale over the fate of the Homestead Tax Relief Grant.

The Homestead Tax Relief Grant is a state reimbursement of $428 million to counties and cities for money lost in property tax homestead exemptions. Local governments are supposed to pass the funds along to homeowners as tax credits, averaging about $200 to $300 per household. Hall County was slated to receive about $5 million, but Gov. Sonny Perdue has proposed cutting the grant from this year’s state budget.

This week, the association pointed out that by law, local governments will be required to send out delinquent tax notices to collect up to around $300 per household if the grant is cut.

“We recognize the state is struggling to find that budget deficit and fill that gap they have to fill. The challenge is this is a credit homeowners received back in 2008, and that counties thought they’d be reimbursed for. So we’ve got to figure out how to make up that difference because property owners have to pay everything they’re supposed to pay and right now they have a credit that there’s no funding to provide for,” said Beth Brown, director of communications for the Association County Commissioners of Georgia.

“What we’re really trying to do is to help people understand that the major cut that’s proposed ... really and truly will impact homeowners directly. There’s no other option left for the county except to bill property owners for that credit that they received back in 2008.”

According to a memorandum sent to the members of Georgia’s General Assembly, there is no
option to reduce spending to accommodate for the loss of funding or provide local exemptions, as suggested by some.

“HTRG credits are a result of a grant of power to General Assembly and there is no similar authorization to local governments. Consequently, counties, cities and school boards are not authorized to provide similar credits,” read the memo from the association’s legal counsel, James F. Grubiak.

Perdue’s director of communications, Bert Brantley, said the governor feels the program is a good one to cut and there just isn’t enough money to fund it.

“These grants have not reduced property taxes. ... The governor feels it’s a policy that’s been ineffective, a policy that hasn’t worked,” Brantley said. “With the continuing souring economy, already cutting $2.2 billion out of the budget, it’s very difficult to find $428 (million) more.”

Brantley also said local governments are engaging in a blame game, and need to look at other ways to cut costs.

“It’s obvious that local governments are trying to scare folks into believing that new tax bills are coming,” Brantley said. “They are upset that the government raised the issue of local government spending.”

But Brantley engaged in a blame game of his own, pointing out some of the things local governments should have done.

“There is another option, that’s to look at their budgets and reduce their spending in the same way that the state is doing,” Brantley said. “We first raised this issue back in August. Many local governments, based on the advice of ACCG, sent out tax bills with the credit on there even though the governor had said that it was going to be very difficult for us to fund it and that he was withholding the grants. Any attempt by them to say ‘well because we put the credit on there, now we’re forced to,’ I mean, that was a decision they made to put the credits on there.”

Local government officials and many state legislators are at odds with Perdue. Hall County Board of Commissioners Chairman Tom Oliver said he thinks Perdue would be acting irresponsibly to cut the grant at this point, nearly two months after taxes were due.

“I think it’s a shame that at the state level they’ve decided at the 11th hour to take advantage of the homestead exemption.” Oliver said. “It’s so unfair to the average homeowner.”

Oliver feels there are many other measures the state should take before cutting the grants because it would create a hardship for taxpayers. “It’s not the way state government should be run,” Oliver said.

State Rep. James Mills, R-Chestnut Mountain, said though it will be difficult, he supports keeping the Homestead Tax Relief Grant.

“Unless the Homeowners Tax Relief Grant is in the budget I won’t be voting for it. ... I’m opposed to balancing this budget on the backs of property owners,” said Mills, who thinks many legislators agree with him. “The main challenge is finding $428 million.”

House leaders proposed a plan Tuesday in which the state would fund the program this year but state revenue must grow by at least 3 percent in future years for the grant to continue.

State Rep. Larry O’Neal, the plan’s author, said that means there’s “almost zero chance” the program would be funded next year. But the proposal helps the state keep a promise to its taxpayers while holding the door open to a possible revival, he said.

A range of House leaders have signed onto the bill, and Senate leaders initially signaled they approve of the idea as well.

A key House subcommittee also approved a plan Tuesday that would limit property assessment hikes to no more than 3 percent each year or the rate of inflation, whichever is lower.

Doug Aiken of the Hall County Taxpayer Association said he thinks cutting the grant, which he called a “back door tax increase” could have other negative implications for the county.

“Right now, SPLOST VI is a flip of a coin on passing,” Aiken said of the Special Purpose Local Option Sales Tax that will be up for a vote in March. “If it doesn’t pass we’ve got a financial bind in the county.”
The Associated Press contributed to this story.



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