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The Truth about Property Taxes
I hope you’ve been following the eight-part series in this newspaper by D.L. Bennett and John Perry on Atlanta’s property tax meltdown. This exhaustive investigation is why we need newspapers. You simply aren’t going to get this quality of extensive journalism from radio or TV, and Atlanta’s various magazines are too full of plastic surgery ads and pictures of society-types stuffed into too-small gowns at their various functions to have room for such a report. (Ouch!)
The bottom line here? You are supposed to pay property taxes based on the value of your home. In case you haven’t checked lately, the value of your home has probably gone down. Now, check your property tax bill. Has it gone down? Well, it should have. Trouble is you most likely live in a tax jurisdiction where the political class is so addicted to your money they will go through any contrivance necessary to make sure your tax bill stays right where it is — or goes up.
I have a home in Atlanta. We just got nailed with a 42 percent increase in our property tax rate. Why? Because the city government is, and has been for a long, long time, a bloated and inefficient jobs program for graduates of the pathetic Atlanta government school system — and I used the term “graduates” advisedly.
When the esteemed Bill Campbell was flying the Jolly Roger from that tall building on Mitchell Street, the AJC regaled us with descriptions of how many more city employees Atlanta had per capita than most other major cities of the same size. Well, see if you remember this: Shortly after Campbell took office, he held a press conference. Sitting at a table with Campbell were officials of various government employee unions. Campbell proudly announced to the media that he had just entered into a “contract” with these unions whereby he pledged that as mayor he would never take any action that would result in the loss of one union job. Sweet.
A few torturous years later, Campbell was helping provide employment for unionized prison guards.
And you wonder why the city couldn’t allow your property taxes to drop?
I could spend the rest of this page entertaining and amazing you with Bill Campbell stories (remember the stolen car in his driveway?), but I want to bring up another Atlanta mayor: Andrew Young. Young came up with an amazing idea. Atlanta, you see, owns Hartsfield-Jackson International Airport, the most important economic entity in the Southeast. However, FAA regulations forbid the city from making one cent from the operation of the airport.
So, Young thought that the city should explore either selling or leasing Hartsfield to give Atlanta property owners some tax relief. Some studies showed that selling or leasing Hartsfield could wipe out residential property taxes for the entire city.
The idea went nowhere.
Why? That would be because Hartsfield was a power base for Atlanta politicians. The people who held the jobs at Hartsfield, their friends and families, represented a huge number of votes.
Political power, then as now, won out over financial responsibility. The city of Atlanta still makes nary a cent from the operation of an even bigger and more important Hartsfield-Jackson.
That’s the true story behind this property tax scandal. Politicians love power, and you gain power by spreading money around.
Lower taxes ... less money to spread around ... diminished power. I think I saw Einstein draw that equation on a blackboard once.
Broken Tax System hurts the Poor
Georgia’s property tax system is broken and homeowners in our most vulnerable neighborhoods are paying the greatest price. The AJC’s “Property Tax Meltdown” series highlights the need to reform systemic flaws that grossly over tax low-income and high-foreclosure neighborhoods and often under tax more stable affluent neighborhoods and commercial properties.
Fairness and due process are the foundation of a trusting relationship between a government and its people. But metro assessment practices have essentially violated that trust by over-billing low-income residents living in high-foreclosure neighborhoods by up to triple their fair share of property taxes.
Georgia law is pretty simple. Local assessors must set values at a price that a willing buyer would pay to a willing seller. In a competitive marketplace that value is the sales price at the time of purchase. Until very recently, it was a standard practice for assessors to exclude sales of foreclosed homes from their valuation formulas. In 2008, thanks to a change in state law, assessors can no longer legally ignore the devastating impact of foreclosures on our neighborhoods.
Across all five metro counties, low-income residents of high-foreclosure neighborhoods suffer the most from flawed assessments and the resulting tax burden. During the late 90s, these neighborhoods were the victims of mortgage fraud, flipping and predatory lending. As a result, they have been over-assessed for nearly a decade.
By contrast, owners of higher-end homes would often contest their tax assessments because their neighbor was paying less. Few have argued that they couldn’t sell their house for the assessed value. This bears out in the AJC’s research — in Atlanta’s most stable zip codes, assessed values are still only 84 to 88 percent of demonstrated market sales, despite the depressed market. This was especially true with commercial properties. Fulton County’s commercial digest was grossly undervalued. Until last year, Fulton’s commercial properties had not received a complete revaluation since 1991.
Property tax values in low-income, minority neighborhoods were already inflated prior to the onset of the foreclosure crisis. Now, these homeowners are living in the neighborhoods most ravaged by foreclosure. According to ANDP’s research, at the end of 2008 homes selling in southwest Atlanta’s Pittsburgh neighborhood were selling for a fraction (on average 20 percent) of the county’s assessed value. Fulton recently made a 27 percent average adjustment, but these residents are still paying $1,300 dollars more in taxes annually than they should.
The crisis is affecting homeowners and renters alike in our most damaged neighborhoods. Nonprofit affordable apartment communities are being assessed at up to three times market appraisal values. The increase in rent to cover the higher tax bill is squeezing residents, many of whom are minimum wage earners.
AJC’s research shows a similar story. Atlanta’s 30310 is the region’s most overassessed. It has a foreclosure rate of 8.5 percent, average annual income of under $28,000 and minority population of 96 percent. The stories are similar for low income neighborhoods along Atlanta’s southern crescent from Atlanta and south Fulton to Clayton and south DeKalb.
Providing tax equity is critical to stabilizing our most vulnerable neighborhoods. Some governments waive local property taxes in empowerment zones, which attracts new homeowners and investors to disadvantaged neighborhoods. Metro Atlanta is currently pursuing a strategy of dis-empowerment. We are driving out residents and investment by doubling taxes in struggling neighborhoods.
Acknowledging critical local government revenue shortfalls, some seem to argue that counties should ignore state law by not assessing homes for what they are actually worth. We should not ask any taxpayer to pay more than their fair share just because deficits are looming. The tax assessor’s job is to set fair values across the digest. After a level playing field is set, local government officials must determine the millage rate required to meet critical local needs.
If assessments are not adjusted to market levels in our most vulnerable neighborhoods, our region will pay the ultimate price in vacant and abandoned homes, blighted, crumbling communities, increased crime, and a deteriorating tax base.
(Oct. 02, 2009) Anthony Foxx: No Property Tax hike for Streetcar
Democratic mayoral candidate Anthony Foxx said Thursday he wouldn't raise property taxes to pay for a streetcar, despite his vote to move ahead with the project and suggestions from city staff that a hike may be needed.
"We aren't proposing or considering any increase in property taxes, and now would be a terrible time to think of that," he told the Observer. "I will not raise property taxes for the streetcar."
The streetcar and property tax issues came up when Foxx and Republican John Lassiter spoke to a luncheon of the Charlotte Regional Mortgage Lenders Association at the Myers Park Country Club.
Lassiter has also opposed Property Tax increases.
The rivals, both at-large city council members, were on opposite sides last month when council Democrats overrode Mayor Pat McCrory's veto of $4.5 million to start design work on the line.
The project, which would run from Johnson C. Smith University through uptown to Eastland Mall, would cost over $450 million. It's unclear where the money would come from.
"I could not promise to build something I didn't know how to pay for," Lassiter told the mortgage group.
Foxx defended his vote. He said the line would bring economic development to neighborhoods that need it. One study showed new development could generate $112million in new property taxes over 20 years.
"The future of our city is dependent on making every part ... a great place to live in," he told the group.
On Monday the city staff outlined ways to pay for the line to the council's Transportation Committee, which Foxx chairs. One option called for creating a special taxing district along the line and enacting a 4-cent tax hike for every $100 of taxable value. Another called for a citywide tax increase of 2 cents.
The city's current tax rate is 45.86cents.
"By supporting the streetcar, I'm not committing myself to a property tax increase," Foxx said later.
During the meeting, he defended his vote for a 2006 city budget that raised property taxes 9 percent - the first increase in at least a decade. Lassiter voted against the budget.
Foxx said the tax hike helped pay for the 70 new officers the police chief requested, more than in the no-new-tax budget supported by Lassiter and McCrory. It also brought in money for new roads and neighborhood improvements.
He suggested that without the tax hike, Charlotte's crime rate might not have gone down. Police say it's down 20percent from a year ago.
"You can't out a price on (a) family's sense of safety, put a value on the life saved because we had the additional police officers," he told the group.
Lassiter has criticized "unnecessary and unmanaged government spending" that he says had nothing to do with police, roads or neighborhoods.
Thursday he alluded to this year's General Assembly actions that raised the state sales tax by a penny and enacted surcharges of 2 percent or 3percent on some taxpayers. He told the mortgage lenders that he'll keep taxes down.
"We're in a high-taxed city in a high-taxed state," he said. "We've got to right the ship."
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Sources: Atlanta Journal Constitution, MSNBC, CNBC, McClatchy Newspapers, Charlotte Observer, Charmeck.org, The Real Estate Blogster, Google Maps
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