Property Taxes a Big Issue in Georgia's 2010 Elections

Property taxes promise to be a big issue in Georgia's state elections this November. Property tax reform is a central tenet of Democratic gubernatorial candidate Roy Barnes' platform and is likewise on the minds of many Georgians due to skyrocketing property tax bills.

Georgia homeowners have been hard hit by the foreclosure crisis that began with the mortgage meltdown in 2008. For example, statistics show that at the end of 2009, foreclosures in Georgia were up by 24% when compared to 2008 and by 170% when compared to 2006 (http://www.capitallistings.com/foreclosures-georgia-where-weve-been-and-where-we-may-be-headed).

My own neighborhood in west Georgia shows the widespread nature of the foreclosures. Of the five houses nearest me, one on each side and three across the street, three have been in foreclosure. Two of these houses remain vacant and have been empty for months while the foreclosure process works its way through the courts and the bank seeks a new buyer for the property.

It is no secret what the numerous foreclosures have done to home values in the neighborhood. Houses here were moderately priced when I purchased my home in 2006, two years before the real estate market crashed. Now it is very difficult for the homeowners to sell at all. One homeowner who had been transferred to a different city found that his property did not sell for 25% less than I paid for my house four years ago. An examination of real estate sales data on the county tax assessor's website indicates that distressed properties often sell for over 40% less than my house cost.

This has created a property tax crisis in Georgia. There are dramatically fewer households paying property taxes than four years ago. This means that for local governments to maintain their previous level of revenues they must increase property tax rates for remaining homeowners. This can be done by either increasing millage rates or by increasing the estimated fair market value of the property.

My property taxes have increased by approximately 30% since I bought my home in 2006. This is largely due to an increase in the fair market value that was assessed last year. In spite of the crash in real estate prices, the county tax assessor increased the value of my home. I appealed this decision on the grounds that the fair market value was grossly overstated based on current market conditions. In spite of the fact that there is no way that the house could sell for its current assessed value, I was granted only slight relief.

The problem is widespread. Some reports indicate that the valuation of some properties have increased by as much as 100%. This is simply a back door method of increasing taxes on homeowners.

As the number of remaining homeowners dwindles and property owners are forced to carry an increasing share of the tax burden, voter anger will continue to increase. Look for both parties to try to seize this issue and promote their own versions of tax reform. A Republican measure was signed into law in June 2010 with bipartisan support.

A more immediate answer to the property tax problem is for voters to demand that local governments enact budget cuts. Forcing governments to live within their means would reduce the amount of tax revenues needed. Tax assessors would not be pressured to find more tax money and property owners could get a break. Reducing the cost of home ownership would also help stem the tide of foreclosures and help people to get back on their feet.