Cannon: Homestead exemption, new sales tax would work together

Published 4:24 pm Monday, January 27, 2025

MOULTRIE — Some Georgia counties and school boards are choosing to opt out of the statewide homestead exemption that is part of legislation passed last year in Georgia. The Colquitt County School Board and Colquitt County are not among them.

“In response to the voters passing House Bill 581, the Colquitt County Board of Education has decided not to opt out. The Board will closely monitor the effect on the annual millage rate and be prepared for future adjustments,” the Colquitt County School Board said in a statement.

During a January work session of the Colquitt County Board of Commissioners, County Administrator Chas Cannon explained, in detail, the piece of legislation, and it was the general consensus of the board to stay in.

Email newsletter signup

Also, the commission will look at the possibility of asking voters to adopt a Floating Local Option Sales Tax (FLOST), in November, which would add a penny to the current sales tax.

Discussion with commissioners about homestead exemption

“The HB 581, which passed last year by a pretty large margin locally allows, in addition to a cap on homestead exemptions or homestead values, it also allows for FLOST,” said Cannon when opening discussion on the legislation at the meeting.

According to a Georgia Municipal Association and Association County Commissioners of Georgia fact sheet, HB 581 primarily does three things. It provides for some procedural changes to property tax assessments and appeals. It provides for a new statewide homestead exemption that applies to local governments, unless they affirmatively opt out. Then, it creates a new local option sales tax that is used for property tax relief.

“This FLOST would, basically, have to be a one for one swap with sales tax to offset your property tax in your general fund,” Cannon said. “So, essentially, it’s a shift of the tax burden from parcels to consumers.”

He added that it could be done like any other SPLOST or TSPLOST, “You have to have a local referendum, meet with all your cities. It’s limited to five years.”

He also told the commissioners that it allowed them to offset property tax, in the county, with sales tax.

Commissioner Barbara Jelks asked, “What about our surrounding counties? Do they have this FLOST?”

Cannon responded that it was open to every county that wanted to participate and that it was new legislation.

“A lot of school systems are opting out because they’re worried about it impacting their ability to raise revenue from property taxes. I don’t agree with that,” he said.

Also according to the fact sheet, if a school board opts out, counties and municipalities can still levy the FLOST. School systems currently cannot receive a share of the FLOST, as they cannot receive revenue from sales tax, except from the ESPLOST and ELOST.

Consequences of opting-out of homestead exemption

County Attorney Lester Castellow asked, “So, in order to do it, you do not opt out?”

Cannon replied, “To opt out, you have to take an action. To stay in, you don’t take any action. You can opt out up to March 1 but you have to have three hearings, just like a millage rate increase.”

Then, Commissioner Marc DeMott said, “I really thought it was going to be negative … but I’ve been talking with several people around about it and they really like the idea … because it (FLOST) has to go directly to the property taxes.”

“I haven’t heard of any of our cities … I think that this gives us time to kind of educate the cities a little bit,” said Cannon.

The same fact sheet from the two Georgia entities states that, “If a city that imposes a property tax opts out, then the county and all cities within the county will be ineligible for the FLOST.” It goes on to clarify that if even one city that levies a property tax opts out, the FLOST is not permitted.

“My biggest concern is that opting out will deny every property owner in Colquitt County a considerable property tax reduction with the new FLOST,” Cannon said in response to an email from The Observer. “The law is currently written so that each individual local government has the choice to opt out on the homestead exemption, but if they do, it prevents the County and all the other cities in the County from participating in the property tax offset. By doing so, we could miss out on a county-wide property tax reduction and the county citizens who live within cities would also miss out on a city-wide property tax reduction.”

In the January 22, edition of the Moultrie Observer, the City of Norman Park ran an advertisement stating its intent to opt out of the statewide adjusted base year ad valorem homestead exemption. Public hearings are Jan. 29, at 6:30 p.m.; Feb. 5, at 10 a.m.; and Feb. 5, at 6:30 p.m. The hearings are at 154 East Broad Street in Norman Park.

“I’ve spoken with the mayor, the city clerk, and some of the council members about it,” Cannon said by email. “I don’t have an issue with them having the hearings to discuss it with their citizens. I think more information is always better. There is also an educational piece to the legislation and I think they are doing the right thing to try and understand it better.”

“The final decision will rest with city councils and the county commission and I think they should all feel comfortable with all the information before making a final decision. I’ll try and answer all the questions I can if anyone has any. Above all, this a good opportunity for our citizens to have some property tax relief,” he also responded.

Reduction of property taxes and the homestead exemption

During the January commission work session meeting, Jelks asked, “Now, will this give us a significant reduction in property taxes?”

Cannon responded that the county’s general fund property tax was around $15 million.

“And our annual SPLOST brings in about $7 million … about half,” he added.

Because FLOST and SPLOST are calculated the same way, they should bring in the same amount of revenue. Cannon said a mill of property tax is worth a million dollars, so the FLOST would represent a seven-mill reduction.

“That’s a huge reduction in property tax,” Cannon said. “Seven mills worth.”

He also pointed out that the county’s rate, right now, was at 9.974 mills for the unincorporated area and 13.383 mills for the incorporated. If those rates were brought down by seven mills, he said, they would be 2.974 and 6.383.

“It takes it and spreads it out to people who don’t necessarily live here. They’re passing through, they’re on vacation,” he said.

The issue with the FLOST, he said, was that if the economy went down, the county would need to draw down revenue from property tax for sales tax.

“Sales tax really fluctuates. Property tax is mostly steady. And at some point, sales tax will decline. And in order to make-up for that revenue we’re getting from it now, if it goes back down, we’re gonna have to probably raise the millage rate to compensate. That’s probably the only drawback that I see,” he said.

Options for school boards

Cannon said that most of the counties he’s heard were staying in and the school boards were thinking about getting out.

Commissioner Mike Boyd asked Cannon why school boards would opt out.

“You’re taking part of the digest that they are getting their revenue from and capping it. So, if you depend on that revenue, now, it’s gonna be kind of off the table,” he replied and added that he didn’t understand why it was an issue because the school boards could always raise their millage rate.

Cannon explained that the legislation was removing some of the value from the homesteads by capping the property taxes at the rate of inflation.

Commission Chairman Denver Braswell asked how a school system could opt out if the county opted in.

“The local government … any local subdivision of government can opt out. In other words, if Berlin wanted to opt out, they can still tax their homesteads at their millage rate without capping it,” Cannon replied.

He also said that, if a school system opts out, the homestead exemption is not applied to the school tax.

“Your homestead exemption, if they opt out, would not fall under the cap. They would just raise on the rate of inflation,” he said. “So, the homeowner would pay a higher property tax if the assessment values went up.”

Commissioner Paul Nagy asked Cannon if he was sure that the Colquitt County School System was opting in.

Cannon replied, “I’ve talked to them several times. We’ve had a meeting with the school board. Sam (Senator Sam Watson) and I went and explained it. We looked at all their numbers and it wouldn’t impact them hardly at all.”

In conclusion

Braswell asked, “So, in one vote, this would be the extra penny on sales tax and a fixed rate deal on the homesteads?”

“It’s all combined,” replied Cannon. “It will put a little more emphasis on the millage rate as opposed to the digest.”

He also said he thought the even with the cap, the digest would still carry the cost.

“The digest is gonna carry the millage for a good, long while,” he said.