Moultrie Observer

Local News

January 27, 2009

Higher taxes now and later

MOULTRIE — An organization representing the state’s county governments warned this week that homeowners face another tax bill and possible interest fees for 2008 taxes related to the elimination of payments to counties and school systems.

In addition to higher taxes this year, mortgage holders also could see payments increase to fund escrow accounts to pay increased 2009 taxes, officials said.

The Association County Commissioners of Georgia said that local governments will be required to collect from local homeowners the amount that in previous years had been picked up by the state under the homestead tax relief grant program.

The organization’s legal opinion came after Gov. Sonny Perdue’s supplemental 2008 budget did not include making the reimbursement, totaling $429 million statewide, to counties and school systems.

Unless legislators restore the funding, a total of 7,257 homeowners in the county will be responsible for picking up the nearly $1.76 million tab that would have been provided by the state to local coffers, Colquitt County Tax Commissioner Cindy Harvin said.

The extra taxes for 2008 would vary, depending on whether the homeowner lives in a city or unincorporated county, and the millage rate in their particular city.

Homeowners in unincorporated areas would have to pay an additional $196 in 2008 taxes. Norman Park residents would pay the most at $332.70 per household, while those in Funston and Riverside would pay an additional $226.92.

Moultrie homeowners would pay an additional $290.70.

The supplemental 2008 budget was proposed to deal with a significant shortfall in sales tax revenue due to the weak economy, and the Legislature is expected to also eliminate the homestead exemption payments to counties for the 2009 fiscal year.

“You know what it’s going to mean for people with escrows?” Harvin said of the elimination of the exemption. “Your house payment is going to go up. You’re going to have to come up with it this year because it’s not in your escrow. And next year everybody’s house payments are probably going to go up.”

The county also would incur the cost of sending the tax bills for 2008 taxes, Harvin said. That would amount to as much as $5,000 in direct mailing costs, not counting the employees’ time in preparing them.

The issue was first raised in August 2008, but county officials were hoping that the state would restore the money.

“I really thought they would pay this,” Harvin said. “I was expecting them to cut it for 2009.”

Aaron Johnson, an economics professor at Darton College, said that the timing of additional taxes is not good for homeowners but lawmakers also are faced with difficult choices in the face of falling sales tax collections.

“If we continue to fund the homestead exemption it means further budget cuts in other areas,” he said. “You certainly can’t tax our way out of this either.”

Johnson said the state needs to tread lightly on cutting the budget in areas such as education and infrastructure, which will be the basis of future economic growth. The state also should not neglect training for laid-off workers so they can get jobs when the economy recovers, and other social services that benefit Georgians in an economic downturn.

“When there’s a significant cut in education funding, that affects children who are in our schools,” he said. “At a time when we need social services the most, the more we lean on the programs, is at a time these revenues are shrinking. It goes beyond education. It goes to crime. Crime’s on the rise.”

Lawmakers also should keep in mind Southwest Georgia’s economic potential in the form of tourism related to its natural resources and beauty, Johnson said.

“You need to make tough choices,” he said. “But it goes back to effective leadership, and that’s what’s needed. We need state legislators who are creative enough to come up with a new economic development plan for rural areas.”

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