The Whitfield County Board of Commissioners wants to give homeowners a break, possibly a huge break, on their property taxes. But some other local officials say the commissioners’ plan won’t actually lower taxes, it will just shift them onto business and industry.
The disagreement stems from the commissioners’ desire to change state law to target tax relief to homeowners instead of to all property owners.
Whitfield County currently has a Local Option Sales Tax (LOST) that raises about $18 million a year. Under state law, counties and cities with a property tax must use LOST money to roll back property taxes. Commissioners can’t use the LOST to roll back taxes in the new special tax districts, only for general property tax.
Currently, just 22 percent of the value of the roll back in Whitfield County goes to residential properties, according to data provided by commissioners. The rest goes to other types of property, primarily commercial and industrial. Outside the city of Dalton, just 12 percent of the value of the roll back goes to residential property.
“I don’t think that’s what the residents of this county had in mind when they voted on the LOST 40 years ago,” said Board of Commissioners Chairman Mike Babb.
Babb and the rest of the board have asked Whitfield County’s delegation to the General Assembly to change state law to allow voters to dedicate all or part of the LOST revenues to rolling back property taxes to properties that qualify for the homestead exemption, basically someone’s primary residence.
“If we can use 100 percent of that money to roll back residential property, that would be great, but if it’s just 40 percent or even 30 percent, we’ll take whatever we can get,” Babb said. “We think 22 percent is not enough.”
Only after homestead properties have been rolled back would the rest of the tax digest get a roll back. Babb said he does not want to change how the money is divided among the county and the various cities. The county only recently concluded a deal that calls for the city of Dalton to receive 32 percent of LOST revenues in 2013, with that share rising 1 percent every other year to 36 percent in 2021. Whitfield County will get 64.851 percent in 2013, with that share dropping to 60.457 percent in 2021. The rest will be divided among the county’s other three cities. The county and Dalton must renegotiate that split every 10 years, after the results of the latest census are in.
Babb says commissioners also do not want to change how the cities roll back their property taxes. Their proposal would only affect how the county rolls back its property tax.
Having a HOST
The commissioners’ proposal would make the Whitfield County LOST work more like a second type of local sales tax permitted by Georgia law, the Homestead Option Sales Tax (HOST.) The state allows counties to adopt only one of those two taxes. They are both 1 percent taxes, and both are charged on the same items. So to those paying the sales tax, it doesn’t make a difference which tax a county adopts. But to property owners it could make a big difference.
“Under the LOST, because you are spreading it out over so many different types of properties, the property tax reduction is far less on any one type of property. However, everybody who owns property gets something under the LOST,” said Clint Mueller, legislative director for the Association of County Commissioners of Georgia. “The HOST is targeted, so the homestead property owners will get a far bigger tax break than they would under a LOST. But you don’t get a break on any non-homesteaded property you own.”
“If I’m going to the polls, and the only property I own is the home I live in, then I’m clearly in favor of a HOST over a LOST. It will financially benefit me,” Mueller said. “But if I own other types of property, HOST may not be the best alternative to me.”
Currently, just two Georgia counties — Rockdale and DeKalb — have a HOST, 154 counties have a LOST, and three have neither. The General Assembly allowed counties to adopt a LOST in the 1970s. It approved the HOST in the 1990s, after most counties had already adopted a LOST.
Cherokee County voters rejected a HOST in November. Cherokee has neither a HOST nor a LOST.
Mueller said a number of factors affected the Cherokee County vote. For one, under Georgia law, just 80 percent of HOST money goes to rolling back homestead property taxes. The remaining 20 percent can be used by county officials for capital projects. Mueller said local tea party activists opposed the tax because of that latter provision.
Mueller said that some Cherokee officials said voters may have been confused because the HOST vote actually required them to vote on two separate ballot questions, one on the tax itself and the second on the homestead exemption.
“Cherokee County officials definitely want to have another HOST vote, but before they do that they want to get the law changed because they recognize the problems they had,” Mueller said. He said they would like to be able to put just one question on the ballot, and they’d like to be able to guarantee that 100 percent of HOST money would be used to roll back property taxes.
Babb said that if the Legislature is going to make changes to the HOST law, he’d like to see members of the Whitfield County delegation work to allow local voters to get a chance to dedicate part of the county’s sales tax to tax relief for homestead property owners.
But state Sen. Charlie Bethel, R-Dalton, says what commissioners want will more likely take a change in the LOST law, since that is what the county has, not the HOST law. He says he has already asked the legislative counsel to look into the idea.
“They were a little bit wary. The general rule is that you can’t charge a different millage rate. Everybody has to pay the same rate. The HOST is a bit of an anomaly in Georgia. But they agreed to do some more homework and try to see if we can do it in a way that complies with the state constitution,” Bethel said. “If we get an unfavorable report, then we have to decide if we want to try to change the state constitution. If we get a favorable report, then we have to see if others are interested in this. It will require a change to a state law, this can’t be done through local legislation, and if only a few counties are interested it would be an uphill battle.”
Bethel said he’s interested in providing tax relief to homeowners.
“At the same time, I’m wary about just shifting the tax burden. If you shift the tax burden away from single-family residential, then you shift it towards business and industry and to everybody who lives in rental properties and apartments,” he said.
Dalton Mayor David Pennington says he is very concerned about any proposal that would shift the tax burden to commercial and industrial property.
“Right now, we need businesses to come in or expand and create jobs. We don’t need to be penalizing them,” he said.
Noting that Dalton’s tax base is 70 percent commercial and industrial and just 30 percent residential, Pennington said the plan would also penalize the city.
“This would tax city taxpayers for services to the unincorporated part of the county,” he said. “We would oppose this.”
Pennington says that if commissioners want to give relief to homeowners they should cut their property tax rate.
But Babb noted that the county has already taken several steps to help business, such as adopting a 100 percent freeport exemption and, unlike some other neighboring counties, refusing to adopt an excise tax on energy used in manufacturing after the state decided to phase out the sales tax on such energy.
“I don’t see how anybody can look at our record and say we are anti-business. But we do think the tax burden has shifted too much onto the homeowner and now it’s time to give them some relief,” he said.
Brian Anderson, president of the Greater Dalton Chamber of Commerce, said, “We appreciate that our county commissioners are looking at this in a holistic and strategic manner to make sure not only that they are providing quality services at the lowest possible cost but that revenue is being assessed in a fair and equitable manner. We ask only that everyone who is benefiting from those services pay adequately for them.
“We believe our county officials, and our city officials as well, are dedicated to keeping this community an attractive place to do business and to keeping us competitive with other communities.”