By Dan Pool
Chief Tax Appraiser Roy Dobbs said last week that the recently passed Georgia property tax value freeze will create confusion in the short term and will be a disappointment to homeowners in the long run.
Governor Sonny Perdue signed House Bill 233 earlier in May, freezing property tax values at 2008 assessments. It became effective immediately. Dobbs said the legislature wanted some type of “stop-gap” measure to lower taxes, but this legislation will not achieve that purpose.
Dobbs said there are still a lot of “believes,” “nothing is set,” and “wait and see” items creating confusion for tax offices across the state.
Among the first challenges for Georgia tax offices will be creating a system to keep a frozen 2008 tax value recorded, while also keeping fair market values updated. Dobbs said it is his understanding, that tax offices must now keep both values recorded, something that their current computer software nor paperwork has a categories for.
“Nobody in Georgia has software set up for this,” he said.
Dobbs said the requirement of adding another value to every piece of real estate on file at every tax office in the state could be expensive in terms of software and the manpower for the input. He called the legislature shortsighted in passing this without first figuring out the practical issues involved.
Dobbs said these uncertainties will not be cleared up before a statewide meeting of Georgia Tax Assessor personnel scheduled in two weeks.
Dobbs predicted that the bill will ultimately not lower property taxes as touted by its supporters.
“Every state that has implemented this -- California, Colorado, and Florida -- has ended up with higher property taxes,” he said. “The perception behind this is crazy. Tax bills are dictated by budgets. You start freezing values and only updating recent sells or new construction and rates will go up.”
Dobbs said especially in a year when the state is cutting back allocations to counties for road paving, the idea of freezing values was poorly thought out. He said they are virtually guaranteeing that local government will be forced to raise tax rates to cover the loss from frozen values and fewer state grants.
“Property taxes are not being frozen,” he said. “It’s only the assesments.”
Dobbs noted that the initial legislation calls for the freeze of values at 2008 levels to last for three years. New construction or sales will still prompt a re-assessment.
If left in place permanently, the freeze would also have two other negative effects, the chief appraiser said.
First, it will create a system with gross inequality. You would see neighboring properties where one has a drastically higher tax bill than the other even with the same basic house, he said.
In his experience as a chief appraiser, homeowners get the angriest when they feel they are paying more than those around them and in this case, that will happen, he said.
Secondly, Dobbs said this move will make tax bills for people who are buying their first home or building disproportionately higher than those who remain put in the same house for years.
If everyone else has a frozen value and then someone builds a new house their value, and yearly tax bill, will be much higher to compensate for all the frozen values. Dobbs said if the freeze were left in place for many years, these higher tax bills on new construction would be enough to affect sales.
When asked if the freeze could hurt people whose property values have fallen with the real estate slowdown, Dobbs said it was unlikely. He said despite all the discussion of a slowdown, he had not seen enough widespread lower prices to cause any downward re-adjustment.
There are definitely cases in some subdivisions where a few homes sold below values of a few years ago, but the values used by the tax office are generally conservative and the cases where prices have fallen are considered “isolated,” he said.
“There are distressed or isolated cases, with lower property prices, but we haven’t seen lower prices in an overall indicator,” he said.
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