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What will tag tax cost Hall?
Parks, law enforcement, schools and more stand to lose money
Maritza Lopez, tag clerk at the Hall County Tag Offices, helps Donald Drummonds buy a tag on Thursday morning. - photo by Robin Michener Nathan
GAINESVILLE — A proposed car tag tax cut may be a gift for Georgia motorists, but it could put a strain on government officials trying to craft future budgets.

Lee Lovett, deputy superintendent for the Hall County school system, said the bill could drain nearly $6.2 million from school funding, or the equivalent of benefits and salaries for 85 teachers, when it’s fully realized after two years.

"It’s a good chunk of money," said Lovett, who oversees finances for the district.

The "Property Tax Reform Amendment" does say, however, that the state would provide "local government assistance grants" to governmental bodies "to offset revenue loss subject to such limitations as may be imposed by the General Assembly."

In another comparison, Lovett said the district’s total transportation budget is $8.8 million.

The $6.2 million loss would equal 1.3 mills, with 1 mill equal to $1 for each $1,000 in assessed property value. The school system now levies 15.75 mills, Lovett said.

The proposed constitutional amendment would remove half the tax, which is a deductible item on federal tax returns, on "qualified motor vehicles" beginning July 1, 2009, and all of the tax "for each 12-month period thereafter," according to the House resolution.

The proposal defines a qualified motor vehicle as one "titled in the name of an individual natural person and may include further limitations and qualifications."

Vehicles belonging to businesses would be required to continue paying the current tax.

Janet Allison, chief financial officer for the Gainesville school system, couldn’t be reached for comment.

Concern over the potential of lost revenue has school officials ringing the phones of members of the state Senate.

State Sen. Lee Hawkins, R-Gainesville, said he has heard the concerns of the Hall County school system, but believes that the state will make up any shortfall.

"They were very concerned and rightfully so," Hawkins said. "The resolution states that the state will reimburse the county for that ad valorem tax."

State Sen. Jack Murphy, R-Cumming, said he has had calls from Cherokee County, the largest school systems in his district, with concerns about a possible cut in revenue if the resolution goes forward.

However, Lt. Gov. Casey Cagle, who presides over the Senate, has given a hint at his stance on the proposal.

"Now is the time for targeted tax relief that stimulates the economy and creates jobs," Cagle said. "The House has started this debate, and the Senate will make time for meaningful and substantial deliberation on tax relief to benefit our economy during this economic downturn."

If the amendment is passed, school system will not be the only entities effected.

The Hall County government will also have to trust the state government to reimburse it for the nearly $3.5 million — about half of a mill — in revenue that until now has come from car tag taxes.

The money goes into the county’s $92 million general fund, which is used to support the Sheriff’s office, courts, parks, planning and zoning and the like, said Assistant County Manager Phil Sutton.

But "if they decide that their budget is short and they need to cut out the reimbursement, that’s how much we would lose," Sutton said.

Sutton’s biggest concern about the bill is not the car tag tax, however.

"The most disconcerting thing about that legislation is the capping of the re-evaluation," he said.

In addition to cutting car tag taxes, the amendment would also keep local governments from raising assessed property valuations for residential property by more than 2 percent of the previous year’s increase. The same goes for non-residential property with a cap of 3 percent of the previous year’s valuation.

But, if property is sold, it can be re-evaluated at the fair market value.

The intention is to keep property owners from facing large increases in their property taxes as property values rise annually.

The amendment may be well-intentioned, but Sutton said it can create large gaps in the tax base. If a house is sold in a neighborhood that has had an increase in property values, and the property is re-evaluated at its fair-market value, the new owner of the house will be paying more in property taxes than the person who has lived next door for the past 10 years.

Sutton said a similar property tax program to the one proposed by the House has caused quite a bit of unrest in Columbus, but Sutton was unsure whether that part of the legislation would have an impact on the county’s revenue.

"We just don’t have those numbers yet," he said. "This bill has been moving around as fast as lightning."I don’t know that there’s any hope that the Senate would not pass it," he said. "It passed so strongly in the house.

Harris Blackwood and Ashley Fielding contributed to this report.

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