(The Center Square) – Georgia lawmakers say a bill capping property tax growth will stymie the steep increases over the past six years, but local officials worry about how they would make up the lost revenue.
House Bill 1116 requires cities and counties to cap property tax increases at 3% or the rate of inflation.
The Georgia House of Representatives passed it late in the evening on March 6, ensuring the bill would cross over to the Senate. The bill is considered a watered-down version of a measure that would have eventually ended homestead property taxes in the state, proposed by House Speaker Jon Burns, who first raised concerns about their increase.
“Property tax rates have skyrocketed far beyond what most Georgians can reasonably afford or be expected to pay, placing an unfair and unsustainable financial burden on countless homeowners throughout the state,” Burns said.
Rep. Blackmon Shaw, R-Bonaire, the bill’s sponsor, used a line graph to show that cumulative property tax increases generated $10 billion for local entities between 2019 and 2024 during the debate two Fridays ago.
“Our intent is to stem what is an unsustainable path for our homeowners and for our property owners across the state,” Shaw said.
The bill would create a new sales tax, the Local Homestead Option Sales Tax, or “LHOST,” that would allow cities and counties to offset property tax revenue.
Shaw did not present any numbers showing how the bill would affect cities and counties. Decatur City Manager Andrea Arnold told The Center Square in an interview that she did the math.
“We did an analysis and said, what would our revenue have looked like if this had been in place the last five years?” Arnold said. “And over the last five years, it would have resulted in approximately a loss of $21 million or about $4.2 million a year. That $4.2 million is roughly equivalent to my entire fire department or over 9% of my operating budget.”
House Bill 1116 is the second bill in three years that affects local property tax collections. Georgia voters approved House Bill 581 in November 2024 capping local property tax increases to the rate of inflation. House Bill 581 allowed taxing entities to “opt out” after holding three public meetings. Entities that did not opt out could enact a floating special-purpose, local option sales tax. The sales tax passed in 32 counties but failed in four, according to the Georgia Municipal Association.
Both bills have effects that go beyond funding services, according to Arnold.
“I was refinancing bonds to save some money and both ratings agencies, Moody’s and S&P point blank asked me what did you do about House bill 581?” Arnold said “I said, ‘Oh, we opted out,’ and for both of them their response was ‘Good because that would otherwise have been problematic because you would have been restricting your ability to raise funds to pay debt service.’ I’ve heard it again with House Bill 1116.”
Other cities, counties and organizations are raising concerns. The city of Chamblee passed a resolution on March 17 asking the General Assembly to defer action on the bill until a comprehensive analysis was completed.
The bill is in the Senate. It would become effective immediately if Gov. Brian Kemp signs it. Arnold said if that happens, the city of Decatur will have to make some hard decisions.
“We cannot absorb losses of four to five million year after year,” Arnold said.
