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Crawford: Watch out for that next state tax bill

POSTED: February 5, 2009 1:00 a.m.

It is always a good idea to pay close attention to what Georgia's legislators do during a General Assembly session, because at some point you're going to end up paying for it.

Case in point: the homeowners' tax relief grant.

This is a program legislators created about 10 years ago to provide a property tax break for homeowners back in their districts. Money is included in the state budget for local governments, which use the funds to pay for a small property tax exemption for homeowners that's worth about $200 to $300 a year. This year, the cost of providing that tax break would be about $428 million.

It was easy to provide the funds for this tax break while the state budget was running a surplus, but the economic recession makes it more difficult to set that money aside. Lawmakers are grappling with a revenue shortfall of $2.2 billion in the current budget, and the $428 million required for the homeowners' tax break would go a long way toward erasing part of that shortfall.

Gov. Sonny Perdue suspended the payment of these funds to local governments last fall and he wants to eliminate them permanently as part of his effort to balance the budget. He's now in a battle of wills with lawmakers who want to continue paying for that tax break, no matter how severe the budget shortage might be.

The House of Representatives voted 117-55 last week to pass a measure that would require the state to provide the $428 million for the homeowners' tax exemption for at least this year. The bill also provides that in future years the tax break won't be funded unless state revenues grow by at least 3 percent plus the rate of inflation, which means it could be several years before the state is in good enough financial shape to reinstitute the program.

"I never want to get into the situation we are now, where we really can't afford to keep that promise (of a tax break)," said Rep. Larry O'Neal, R-Bonaire, who sponsored the legislation.

The bill is expected to win Senate approval, which means it would go to Perdue to be signed or vetoed. Legislative leaders are already talking about calling a vote to override a veto if Perdue should take that course of action.

"We're hoping that that (a veto) doesn't happen, because we're trying to work together on this bill," House Speaker Glenn Richardson said.

This is not one of those black-and-white situations where you have a villain on one side of the issue and a hero on the other side. Both sides have a valid point to make.

Georgia is facing a huge crisis because of the economic recession and that $2.2 billion shortfall accounts for nearly 10 percent of the yearly budget. If lawmakers insist on using the $428 million to fund the homeowners' property tax break, then that money is no longer available to pay for things like schools, Medicaid, highways and public safety. It might also be necessary to require state employees to take nonpaid furloughs from their jobs.

On the other hand, if the state abruptly cuts off the money for the tax relief grants, then every county in Georgia will have to notify every homeowner that they are billing them for the amount of that tax exemption. The tab would probably amount to about $250 for each property owner.

No legislator wants to be inundated with phone calls from angry constituents who've just received a property tax bill they weren't expecting.

Perdue is the one who seems to hold all the cards in this particular game of poker. If that tax relief bill wins approval from both chambers and is sent to him, he presumably can hold off acting on it until after the session has adjourned, making any attempts to override a veto irrelevant.

If the governor decided to take that course of action, it would not be the first time he has been at odds with lawmakers.

Two years ago, during a similar disagreement over a proposed tax break, Perdue vetoed the budget and touched off a fight with Richardson in which the speaker accused the governor of "baring his backside" to Georgia's taxpayers.

Taxpayers should probably get ready to see him bare that backside again.

Tom Crawford is the editor of Capitol Impact's Georgia Report, an Internet news service that covers government and politics in Georgia. His column appears Thursdays.



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