Opinion: Here’s a Sterling tax plan for Fulton homeowners

Fulton County resident Dorothy Hart expresses her concern during an Emergency Town Hall Meeting to discuss property tax assessments, June 13, 2017. (AJC Photo / Hyosub Shin)

The anger of Fulton homeowners largely dissipated after county commissioners froze property assessments at 2016 levels. But it’s clear that was a temporary solution that can’t be repeated every year.

Conveniently, there’s an election right now for Fulton’s commission chairman. One candidate has a solid plan to ensure Fulton homeowners don’t see a repeat of what would have happened absent the freeze, with more than half of them facing an increase of at least 20 percent and almost a quarter facing an increase of at least 50 percent.

“Even if 10 percent of those (higher assessments) are wrong, that would mean there were hundreds of thousands that were close to being correct,” says Gabriel Sterling, one of three candidates for commission chair. “This freeze really is kicking the can to the next tax year. If we don’t get some protections in place this legislative cycle, we won’t have them in place for this catch-up year Fulton County’s doing” in 2018.

Gabriel Sterling (Special)

Sterling’s plan is largely modeled after the law for Sandy Springs, where he has served as a councilman since 2011. Assessments for homeowners could only rise by 3 percent or the rate of the Consumer Price Index (CPI), whichever is lower. But unlike in Sandy Springs, the increase would only be from one year to the next, and couldn’t be calculated cumulatively over a period of years.

The cap wouldn’t apply to commercial or rental property, or to homes that have been renovated or expanded in a way that required a permit. But it would help homeowners who simply don’t want to be priced out of their homes because of a red-hot real estate market.

“The amount of money you make is the amount of money you make, for most people,” Sterling said. “That’s why homeowners need protection. That’s especially true for the gentrifying areas of the cities. If you bought a house in 1985 for $40,000, and all of a sudden your assessment goes up to $450,000, there is no way you can adjust your lifestyle to make up for that difference.”

His bottom line: “No one should have to sell their house because they can’t pay their property taxes.”

Many politicians are hesitant to cap property values because — let’s be honest — soaring assessments are a backdoor source of more tax revenue. Some hide behind the rollback, which provides for a cut in the millage rate equal to the average increase in assessments. But that’s insufficient in many cases.

“It’s great on its face,” Sterling said. “But some people got a 5 percent decrease (in their assessments). Some people got a 20 percent increase. And some people got a 100 percent increase. So if the millage-rate rollback is 12 percent, the guy who got a 5 percent decrease gets a huge tax cut. But the guy who got a 100 percent increase, that (12 percent rollback) is not really helping.”

The idea would be to apply this principle to all three parts of a property-tax bill: county taxes, city taxes and school taxes. That’s what truly separates the plan from the status quo. Sterling thinks it would take local legislation at the General Assembly for each municipality involved, and recognizes it could be an uphill battle in some cases. “But after the outrage we had over those property-tax increases,” he said, “we may be able to get that done.”

Giving Sterling a chance to get it done is well worth a vote for him.

Reader Comments 0

24 comments
breckenridge
breckenridge

The White Supremacist sub-set of Trump supporters held two demonstrations in Tennessee today. They were protesting the relocation of foreign refugees to the state. There was but one arrest in total.  A White Supremacist clown was arrested for making menacing threats.


And invariably some loser will come along and say "oh it's the left that is racist." Such is life in the fool lane.

Queen of Ctown
Queen of Ctown

To make it about me: I'm one of those people that will have to move sooner or later if nothing is done.   My assessment more than tripled which will almost quadruple the taxes (T&I over $1000 per month).  And because of some vague excuse, mine was only partially rolled back (I'm appealing) so it's still more than double and taxes almost tripled.  I  took a chance on a "sketchy" neighborhood 20 years ago and I will eventually reap the rewards for all that sweat equity.   But for now I need a place to live and would like to stay here.   And even for those who can afford it, one questions the sanity of paying that kind of money to live in a neighborhood where there's still substantial crime, the services are poor and the schools are still little more than a babysitting service.

Ken430TX
Ken430TX

Property taxes are regressive and should be banned.  Income taxes are a better tool for financing government, and don't penalize those who are lower wage earners.  No one should be priced out of their home due to increasing property values.

RoadScholar
RoadScholar

State just threw out the Fulton County assessment plan!

ATLAquarius
ATLAquarius

Interesting how the same logic doesn't get applied to unemployment numbers (5% means 95% are employed unless you want caveats like underemployment) but I digress....I like the idea in general of capping the increase with an emphasis on those with fixed incomes and the true assessment should apply once the home is sold.

bu22
bu22

While the idea is necessary, as written it is a bad law.  They are capping it at the LOWER of CPI or 3%.  We might once again be in a Jimmy Carter era and this would hamstring governments.  Ronald Reagan broke the back of inflation, but it could be resurrected.  I also think 3% is too low.  5% or 10% would be better.  A low threshold shifts the burden from those with quickly rising home values to those with flat or slowly increasing values.  While 5 or 10% is enough of a cap to protect the homeowner from massive tax increases without distorting who pays the taxes.

RoadScholar
RoadScholar

@bu22 How about a weighted % based on sales of homes in your area over the past year or so? If the average price of sold homes went up 5.5% then increase all assessments 5 %?

GoDawgs123
GoDawgs123

Two things:

The Sandy Springs law is modeled after one already in place for Fulton County Taxes. Assessments for the County portion of your property tax bill are already capped at the CPI or 3%.

The Atlanta City Council in June unanimously passed a paper sponsored by Michael Julian Bond asking legislature to cap assessments for homesteaded property at 3% or CPI.

Kyle_Wingfield
Kyle_Wingfield moderator

@GoDawgs123 The difference, as I mentioned, is that both SS and FC have a base year of 2003, whereas this proposal would make the base year "the previous year." That would significantly change how the cap is applied, vs. how Fulton is applying it now.

jhgm63
jhgm63

Don't worry, they can always use Kelo vs. New Haven to force them out of their house.

JFMcNamara
JFMcNamara

Is it capped on the way down too?  To be fair, it certainly should, and it would decrease volatility to the county in bad times.


If a new owner takes possession, does the 3% cap apply or does the county get to ramp it up all the way to the appraise value?

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara The value would reset upon purchase by a new owner, at the purchase price. 

As for decreases, there would still be new assessments. I don't think there would be a mechanism to prevent it from falling too far. I have separately advocated a system that sets a standard increase every year, regardless of market fluctuations up or down. This is not that system ... but it'd be a huge improvement over the current system.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara All that said, if I had to guess at how it would play out, the decreases would tend not to be very large if the cap has prevented the increases from keeping up with steep market increases.

For example: If you buy a house at $100,000 and the market goes up by 5% each year for 10 years, your home under the current system would be valued at about $163,000 -- but with a 3% cap (let's assume for simplicity's sake CPI was also 3% each year), it would be more like $135,000.

Now let's say there's a 10% market correction in year 11. That would lower the value under the current system to about $147,000. But that's still higher than what it was under the 3% cap. So (assuming I am right about how the proposal would work) I would expect to see another 3% increase in price even in year 11. Which, as you suggested, would serve to decrease volatility.

Again, if we are working on the premise that most households' finances don't change dramatically from year to year, this essentially shifts some tax revenue from the good years to the bad years. If your finances haven't changed much in the meantime, that's probably OK. (If you lost your job, you probably have bigger problems that wouldn't be solved by eliminating that 3% increase.) Whereas if your taxes went up by a lot more over those first 10 years, a relatively larger decrease in the 11th doesn't really make up for that.

JFMcNamara
JFMcNamara

@Kyle_Wingfield @JFMcNamara That's true for most markets, but it's not necessarily true for hot markets (which are our problem).  In a hot market, turnover is high as each new buyer into the area drives the prices higher.  In addition, there is a lot of new construction. In that case, you will have a concentration of newly bought, high priced homes. The drop in tax revenues will be high leaving the city in a bind.


I don't know the answer, but someone would need to pull out a spreadsheet and calculate a recurrence of 2008 to get a real answer.  The way it works now is that we fill the till in good times and ride out the bad times.  If you normalize the good times, you need to do the same in bad times or create a catastrophe.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara Yes, some of that would still go on, due to the number of new purchases. But that's going on now. The new system would mitigate that by smoothing things out for the rest, which represent the vast majority of homes.

bu22
bu22

@JFMcNamara  No.  The idea is to protect the homeowner, not the government.

JFMcNamara
JFMcNamara

@bu22 @JFMcNamara This could be a bad deal for responsible homeowners and not protection.  They could be potentially much, much worse off in a downturn if revenues fall drastically but the government wasn't able to save money at the peak.


We need a real mathematical analysis to determine the impacts.  Not politics or doing whatever makes you feel good right now.

bu22
bu22

@JFMcNamara @bu22  They can always adjust the tax rate.  But that takes political courage.  They would rather have stealth increases.

bu22
bu22

@JFMcNamara @bu22  These types of things are common around the country.  Its not like this is some brand new idea.

JFMcNamara
JFMcNamara

@bu22 @JFMcNamara Being common doesn't mean better or correct. 


I bought my home because I like the surrounding area.  My primary interest is that the area remains nice and well funded. I've seen towns go downhill from being cheap.  First the roads are unpaved, then once a week trash service, then parks closing, then cutting corners on schools and soon everyone leaves and no one wants to move there.  


I'm very skeptical, and so should everyone else be, of tax cuts and revenue restraints because of that.  I don't mind paying to pay in a nice area. Tax cutters want everything for free then complain when things aren't nice, and they need to be held in check. 

0.853396305509
0.853396305509

My plan is about stopping back door tax increases. If elected officials feel they need more tax revenue, they can vote to bring more, but they shouldn’t be granted money from homeowners with fixed budgets due to their biggest assets, which doesn’t provide them any revenue, has increased in value on paper.

RoadScholar
RoadScholar

How about if a Fulton County homeowner sells their home, and the sale price is larger than their tax appraisal, they then pay back taxes on the sale price minus the assessment? Sure people are in shock. But I bet they would not sell their home at a higher price!


FC could have reduced the millage rate, but....

Kyle_Wingfield
Kyle_Wingfield moderator

@RoadScholar "But I bet they would not sell their home at a higher price!"

Yes, let's look for a new way for taxes to distort the real-estate market. Brilliant.

"FC could have reduced the millage rate, but...."

....but, if you had actually read the piece, you would know why that wouldn't work when many people's taxes are going up by 50%, 100% or more.

RoadScholar
RoadScholar

@Kyle_Wingfield @RoadScholar The market is the market. People always claim their taxes (appraisals) are too high but they are ready to reap a larger profit if possible.


FC could do a freeze like DeKalb, but, unfortunately, it does not apply to school taxes. Also we have no children and are approaching or retirement years. So why do we pay school taxes? Maybe because we reap the benefits when we go to the store and the cashier can actually return correct change? Which is sometimes impossible for them even when the register tells them what that is!)  Or they can learn to support themselves perhaps with a living wage, so my taxes don't go to support them as adults?