Wednesday, June 11, 2008
News Atlanta isn't alone in seeking more tax revenue
Posted by Scott Henry @ScottTheHenry on Wed, Jun 11, 2008 at 8:43 PM
An Atlanta City Council member complained to me recently that the capitol city was taking a drubbing in the media over Mayor Franklin's proposed tax increase, while other tax-hiking entities were getting off scot-free.
After a bit of research, I determined she's right – depending on your definition of tax increase.
At the risk of boring the tax-savvy, I'll explain that the amount you pay in property taxes is determined by two variables – your property assessment and the millage rate – and one constant, your total exemptions. If your assessment doesn't change, but the millage rate is increased, you pay more. If the millage rate stays the same, but your assessment goes up, you also pay more – what is commonly called a "back-door" tax increase.
A few weeks ago, Fulton County, which oversees the assessment process, announced that property valuations had risen a whopping 19 percent, mostly due to higher assessments for commercial property. This means that Fulton, its 12 cities and two school systems, can all expect a tax-revenue windfall even without raising millage rates.
For Franklin, that's not good enough. In order to erase a projected $40 million city budget shortfall, she initially proposed a tax hike of about 1.7 mills, then dropped that to .43 mills, based on the county's assessment estimates. This would mean the owner of a $200,000 house would pay an extra $24.50 a year in property taxes, assuming a standard homestead exemption.
That's fairly meager compared to the $2,400 total tax bill for the example we're describing, but it still represents a tax hike. The Atlanta Board of Education, on the other hand, plans to keep its tax rate – at 22.65 mills, more than twice the city's proposed rate of 9.35 mills – the same as last year.
But just by virtue of the higher assessments, the school board expects to collect an extra $88 million in property taxes next year, more than twice the $40 million the city wants to raise by increasing its tax rate.
In other words, the schools' back-door increase would bring in far more additional tax revenue than the city's proposed up-front tax hike. And the Council member was certainly right about there being no public outcry over the back-door increase. Should there be?
Comments (1)
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Dear Scott and CL readers, There actually is public outcry about APS's property tax increase proposal. Tonight (6/12) there are 42 neighborhood associations meeting to discuss defeating the proposed hike. Last year the APS started with a surplus of over $105 million dollars. The need to raise property taxes in the wake of Mayor Franklin's prop tax increase is ridiculous. How many times do we need to remind City Hall and the APS that the taxpayers need NOT be burdened with the mistakes that elected officials make governing our City?
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