Taxes, Who Likes Them?

Death and Taxes, we've all heard they saying about those inevitable things...

Well, there is some truth to that, but the amount we pay in taxes can be affected by the way your local government manages money and looks for revenue sources to offset or reduce the tax dollars needed to give the desired level of services to the community.

When I, as the budgeting officer for the City of Williamson, create a budget for the upcoming fiscal year, I first look at the needs of the city. I then look at the revenue we have coming in from various sources to pay for those items. The needs (expense) and revenue sides must balance. We have various and varied needs and desires such as streetlights, roads, safety, parks, zoning, businesses, permits, library, grounds maintenance, utilities, water infrastructure, legal assistance, IT needs, the list goes on, but you get the picture; those are some of our expenses. Then, on the revenue side, we have Local Option Sales Tax (LOST), and Special Purpose Local Option Sales Tax (SPLOST) which is collected county-wide and Williamson gets a percentage which I negotiated with all other cities and the county. We get Title Ad Valorem Tax (TAVT), from the State when a vehicle is purchased by a Pike County resident anywhere in the State or brought into the State. We get real estate transfer fees when properties change ownership, We receive franchise fees from various agencies such as Georgia Power, who pays for the use of our rights-of-ways for pole and line placement. State law requires insurance companies to pay a fee for each policy written in our jurisdiction, Georgia also gives an insurance premium rollback to the local government, based upon the degree of public safety and fire protection we provide. We receive fees for issuance of permits, Rights of Way disturbance fees, vendor leases, grants, interest earned, GDOT LMIG funding for road maintenance, etc., and we are always searching for addition sources to lower the property tax burden.

Local property taxes are determined by ad valorem (the value of the property), as determined by the board of tax assessors in accordance with State guidelines, and when the total value of all property in the County is determined, that becomes the tax digest. The tax assessors evaluate, or assess, unimproved real property (land) values during one year, residential improvements (homes) values during one year, and business properties during another year, staffing levels wouldn't support assessing all property in the County every year at the same time, and State law allows this approach. The assessors look at features such as land categories and characteristics, improvement construction features, square footage and business structures and equipment. Personal property such as airplanes and boats are also evaluated. After the property values are determined and the tax digest approved, the digest is presented to the County and to each of the incorporated cities. Again, this is the assessed value of all the properties in that jurisdiction.

After I evaluate all the city needs, requirements, and citizen desires, I add up all the revenue from all the sources such as those I previously mentioned without any property tax or tax digest numbers. The difference in those numbers is what is required to be funded by local property taxes. Remember, expenses and revenue must balance on each side of the budget. So, if the expense side of the budget is greater than the revenue side, I must calculate a millage rate to apply against the digest to raise that needed revenue. The millage rate is a percentage of the assessed value of the property.

If market changes cause an increase in property values, you can see where applying the same millage rate would result in a larger tax being levied. This would be considered a "windfall profit" and should not be allowed, nor would it be appropriate. Remember, I looked at the expenses first, then the total of all revenue sources, minus property taxes, then calculated how much taxes were needed to make up the difference. It would not be ethical to take advantage of taxpayers by collecting extra taxes just because the market drove up values.

The State also realizes that fact and gives the local governments a "rollback rate". The rollback rate sets the millage rate back to what would bring in the equivalent amount of revenue at the previous values. So, if your total digest would have brought in "x" dollars at the previous millage rate, your new millage rate is calculated to bring in the same "x" amount of revenue. If all property values doubled overnight, then the rollback millage rate would still levy the same amount of tax and bring in the same revenue and all property taxes would remain the same. That is why the tax assessor's job is so important. All like properties must be assessed equitably so they are levied upon correctly. If a property is not correctly assessed, it skews the numbers and one neighbor with a similar property may not be taxed the same as another. If only some properties increased, they would have a higher assessed value and only those properties would see increased levy. Local governments are not bound by the rollback rate, but if they choose to not reduce millage rates to the rollback level, they must hold extra public meetings to explain to the taxpayers why they have the need to increase taxes.

At times, another situation occurs. For example, if higher end homes experience an increase in demand and accordingly have an increase in values due to comparable sales or construction costs, those properties may disproportionately increase in value (ad valorem), while others remain near the same levels. Therefore, the true current value of some properties may go up while others remain near constant. The ad valorem tax would increase due the higher value of the property. The owner has, in effect, "moved into a higher priced property", just as if they had actually moved to a more expensive home. If there was a reduction in millage rate to counter the increased values experienced for some property, other properties which didn't experience the increased demand, and associated value increase, would actually have their taxes lowered. These same properties with lowered taxes may require the same, or more services from the city than the ones with increased assessments. We do however allow for this at times in order to lower the millage rate and help the properties affected by the value increases. For that reason, some properties are paying lower taxes than they did in previous years but they are getting the same or a higher level of service than before.

This has gotten to be a very long explanation, or "Property Tax 101", but I hope it helps you to understand the process and the reason one person's property tax may increase even though we lowered taxes. If you moved into a higher priced home, your taxes would be higher. If your home price disproportionately goes up, or you make improvements to your house, your taxes would be higher. If the price of a piece of lumber, or a dozen eggs, goes up, you pay more tax on it at the store, but the store didn't raise the tax.

I as the Williamson budgeting officer, and your City Council, by holding public hearings and adopting the budget and millage rate by resolution each year, try to do all we can to reduce taxpayer burden. We have lowered the tax rates in the city for many years, below the suggested rollback rate, and will strive to continue to do so. We try to offset market increases and make sure all taxpayers are taxed equitably and get the most service for their tax dollars.

Thanks for your time and understanding. Contact me if you have any questions or concerns,