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Tax law reform on GOP agenda

ATLANTA - Georgia lawmakers will be working around the edges of state tax law on Monday's "Crossover Day'' in the General Assembly, the last chance for bills to clear at least one legislative chamber.

Several relatively minor measures affecting tax breaks for senior citizens, the near elderly and property owners willing to leave their land undeveloped dot crowded House and Senate agendas likely to keep the Legislature in session until well after dark.

While that leaves the heavy lifting for next year, majority Republicans aren't waiting to start laying the groundwork for major tax reforms.

Already, GOP leaders have begun pitching a statewide cap on property taxes similar to homestead exemptions now in effect in more than three dozen Georgia cities and counties. And last week, House Speaker Pro Tempore Mark Burkhalter, R-Alpharetta, announced a plan that could lead to eliminating the car tax in Georgia.

What the two proposals share is that they target property taxes, according to tax reform advocates, the least popular form of taxation.

"Citizens in every area of the state are clamoring about the continued rate of growth of property taxes,'' said House Majority Leader Jerry Keen, R-St. Simons Island. "You're seeing it in other states. That's why we're having all these tax revolts.''

Actually, the tax cap has an outside chance of being enacted this year and put on the November ballot as a statewide referendum.

Although it cleared the House Ways and Means Committee late last month, it is not on Monday's House calendar. However, there's a possibility that the Rules Committee could add it to the agenda during one of the impromptu meetings it tends to hold during Crossover Day.

The tax cap would amend Georgia's Constitution by limiting the increase in a property's assessed value to 3 percent per year or the annual rate of inflation, based on the federal Consumer Price Index, whichever is less.

Keen argues that without such a cap, local governing boards can increase the amount of tax revenue they bring in each year by raising property assessments in their communities without taking the politically unpopular step of raising tax rates.

"That's a back-door tax increase,'' he said.

Voters in 39 Georgia cities and counties have enacted similar tax caps since 2001, and homestead exemptions are on the November ballot in six counties. The movement began in the Savannah area, where it was pioneered by Republican Reps. Ron Stephens of Garden City and Burke Day of Tybee Island.

Just in the Atlanta region, the list includes Gwinnett, Cobb, Fulton, Douglas, Forsyth and Barrow counties, and the city of Atlanta. There also are high concentrations of tax cap cities and counties in North Georgia and the southeastern corner of the state.

The local measures take a different approach than the proposed statewide cap. For one thing, the tax break only goes to residential property, while the constitutional amendment would apply to all property.

Also, the local exemptions don't set a limit on local governments' ability to increase property assessments. However, they raise the amount of a property owner's homestead exemption at the same rate as their assessment goes up, so their tax bill stays the same.

With both, the idea is to prevent property owners - especially seniors living on fixed incomes - from being taxed out of their homes.

Opponents of the constitutional amendment agree that's a laudable goal. But they say the proposed cap has both philosophical and practical drawbacks that should make lawmakers think twice before passing the measure on to Georgia voters.

Alan Essig, executive director of the Georgia Budget and Policy Institute, says it raises the same fairness question that opponents raised against the Stephens-Day local homestead exemptions.

The tax breaks in both measures only apply as long as the property remains with the same owner.

"You have two homes exactly the same, built at the same time. Then, somebody sells,'' Essig said. "The new person comes into a $200,000 home that is reassessed at $300,000. ... The tax burden shifts to the new homeowner. Is that fair and equitable?''

From a practical standpoint, representatives of municipal governments and school systems are worried that capping property taxes would leave them unable to bring in enough revenue to keep up with a growing demand for services.

"It's an artificial cap,'' said Amy Henderson, spokeswoman for the Georgia Municipal Association. "The CPI (Consumer Price Index) has nothing to do with what it costs to provide government services.''

Herb Garrett, executive director of the Georgia School Boards Association, said school districts would be hit particularly hard.

He said 45 of Georgia's 180 school systems already have tax rates of 17 mills or higher, or $17 for every $1,000 of assessed property value.

Uncomfortably close to the state's legal limit of 20 mills, they're left with little ability to raise tax rates as an alternative to increasing assessments, Garrett said.

Most of the largest and fastest- growing systems are on that list, including Gwinnett County schools.

"They're the ones buying, leasing and renting all the trailers,'' Garrett said. "The only option that's available is to get voters to let you go above the cap. What kind of a sell is that?''

While local governments and school officials are keeping their fingers crossed that the property tax cap won't enjoy an 11th-hour resurrection on Monday, they don't have to worry about losing the car tax at least until next year.

When Burkhalter unveiled the idea last week, he said the Legislature would form a study committee this summer to examine the potential ramifications of abolishing the car tax in Georgia, either all at once or gradually. He said the tax brings in about $500 million a year, most of which goes to local governments and schools.

"We simply believe Georgians shouldn't have to pay the government to own their vehicles,'' he said. "(But) we're going to look for a creative way to reimburse cities, counties, school districts and everyone else who are the beneficiaries of this tax.''

Essig praised House Republican leaders for not rushing into something as potentially far-reaching as abolishing the car tax.

"I'm glad they're doing a study committee,'' he said. "We need to be very thoughtful about how we make these major tax changes. ... They need to be within the whole perspective of state and local taxes and state and local budgets.''