Reassessment Halt Will Show It’s Spending that Drives Taxes Higher

Published July 15, 2008

Good for Governor Sonny Perdue. His recent decision to end automatic property reassessments may not change your property tax bill right away, but it may change your attitude toward local government officials. And in time that may result in real tax cuts.

Perdue has ordered the Georgia Department of Revenue to inform counties they no longer have to reassess property for tax purposes every three years. That’s important because property tax reassessments have been a handy way for local authorities to keep raising your property tax bills without you getting a chance to vote on it. With that excuse gone, and the truth about rising taxes finally becoming apparent, voters will have better information for holding elected officials accountable for their spending decisions.

Accountability, including the threat of local officials being voted out of office, would be a very good thing.

The truth is, spending–and only spending–causes tax bills to rise. But for years, even decades in many places, local officials have escaped accountability by blaming rapidly rising tax bills on property values. Yet nothing–absolutely nothing–requires local governments to spend more money just because property values rise. A property tax assessment is nothing more than a way to determine a parcel’s share of a total property tax bill in a given area.

In most areas there are many local taxing bodies–school districts, library districts, fire districts, park districts, county governments, municipalities, etc. Each submits its tax bill–called a levy–to the county, and those levies get totaled up. The taxable value of all the properties within each taxing body’s jurisdiction also gets totaled up, and a tax rate to generate the necessary amount of money to cover each levy is set. That rate is usually expressed as an amount per $1,000 of taxable property value. Sometimes it’s called a “millage” rate.

Tax hikers often try to cover their tax-hiking ways by saying they haven’t raised tax rates. But if property values go up a certain amount, say 10 percent, and local governments ask for enough money to keep the tax rate unchanged, the result is 10 percent more property tax is collected.

Tax bills can go up even when rates go down. If property values increase 10 percent and local taxing bodies request 8 percent more money, dropping the tax rate, those taxing bodies will receive 8 percent more of your money.

Local officials reading this no doubt already feel their blood starting to boil.

“If someone’s property goes up in value, they have to pay more in taxes!” they’ll protest.

Well, maybe. That may be true for individual parcels that have a spike in value (an empty lot that now has a house or shopping center on it, or a house that has had an addition built onto it, for instance). But if a parcel suddenly becomes worth a lot more, and the local taxing districts don’t raise their tax levies, that more-valuable parcel would pay more in taxes, and the other parcels would pay less. The total amount collected in taxes would remain the same.

Remember, your tax assessment is nothing more than a way to determine your property’s share of the total amount of tax that will be collected in your area.

Gov. Perdue’s move will make this clear, and that clarity will put the blame for high property taxes where it belongs–on the people who run the cities, counties, townships, school districts, fire districts and other taxing bodies that keep demanding more of your money every year.

Steve Stanek ([email protected]) is a research fellow at The Heartland Institute in Chicago and managing editor of Budget & Tax News.