House Bill 581 is intended to provide more certainty to homeowners who are concerned about surprising and sometimes startling increases in the taxable value of their home in recent years. It provides a new statewide homestead exemption whose value changes (floats) each year to ensure that the taxable value of a homestead does not increase at a rate greater than the rate of inflation from a base year value.
House Bill 581 makes additional changes that:
- Authorize a new local-option sales tax to provide additional relief to all property taxpayers;
- Affect details of how tax appraisals are done, how information is presented in annual Assessment Notices and Property Tax Bills, and how the appraisal appeal process works.
House Bill 581 also includes a unique provision that allows local tax jurisdictions (counties, municipalities, or school boards) to Opt-Out of providing the new homestead exemption to homeowners within its jurisdiction.
The process to Opt-Out is relatively simple. Between January 1, 2025, and March 1, 2025, the governing body of the tax jurisdiction (Board of Commissioners, City Councils, School Boards) must:
- Decide affirmatively, by majority vote to Opt-Out of House Bill 581;
- Schedule, announce and hold 3 public meetings to hear input or reactions from the public about their intention to Opt-Out;
- Pass a resolution stating that the tax jurisdiction has chosen to Opt-Out of House Bill 581; and
- File the resolution with the Secretary of State’s Office no later than March 1, 2025.
No local referendum endorsing or rejecting the tax jurisdiction’s decision to Opt-Out is required.
An angry voter’s only recourse is to “punish” members of the tax jurisdiction’s governing body who support Opting-Out by voting them out of office at their next election.
A vast majority of voters statewide approve and support the new homestead exemption described in House Bill 581. They also understand that House Bill 581 becomes law effective January 1, 2025, if the statewide referendum on House Resolution 1022 receives a majority of YES votes in the upcoming election.
The main concern expressed by voters who I talk with is the Opt-Out provision.
Their comments are along these lines:
What were those legislators thinking? Most tax jurisdictions will simply Opt-Out, and taxpayers will get nothing for their YES vote on House Resolution 1022.
Those concerns may or may not be justifiable. I hope they are not.
My purpose in writing this essay is to provide a layman’s understanding, after extensive research, of HOW the Opt-Out provision came to be a feature of House Bill 581.
In 2023, most Georgia Legislators were hearing calls for help from their constituents: Property taxes were out of control throughout the state, and some homeowners were literally being taxed out of their lifetime homes. Something needed to be done statewide to bring property taxes under control.
Legislators returned to the 2024 legislative session with proposals to address this issue.
- In the Senate Chuck Hufstetler, Chairman of the Senate Finance Committee, and others sponsored Senate Bill 349. This bill mandated a new statewide homestead exemption similar to what is in House Bill 581.
The Senate Bill required that all affected tax jurisdictions in the state enact this exemption, unless the jurisdiction already had a local exemption that provided equal or greater benefits to homestead property within their jurisdiction.
Senate Bill 349 did not include an Opt-Out provision. It was mandatory and required that the new homestead exemption be enacted by the affected tax jurisdictions.
It also required a statewide referendum on the proposed exemption, as required in Georgia’s Constitution.
- In the House of Representatives there were three bills related to property tax relief:
- Representative Beth Camp and others sponsored House Bill 1185 which described a new homestead exemption similar to the one in Senate Bill 349. However, instead of making the new exemption mandatory, HB1185 included an Opt-In provision. The Opt-In provision would allow a local tax jurisdiction by majority vote of its governing board to enact the new homestead exemption without additional legislative action required, but subject to a local referendum approving that the new homestead exemption be provided.
This appears to have been an effort to standardize a new exemption acceptable in the legislature, but subject to choice of local tax jurisdictions to enact it, with no additional legislative action required. Because HB1185 used a new approach for establishing a state wide homestead exemption, the bill required an amendment to the State Constitution, similar to what is described in House Resolution 1022. - Representative Dale Washburn and others sponsored House Bill 1031which provided for minimum mandatory reappraisal of parcels, changed requirements for ad valorem property tax bills, revised provisions relative to appeals, and related matters.
- Representative Noel Williams Jr. and others sponsored House Bill 1115which authorized a new flexible one-penny local option sales tax (‘FLOST’) for the purpose of property tax relief, and other matters.
- Representative Beth Camp and others sponsored House Bill 1185 which described a new homestead exemption similar to the one in Senate Bill 349. However, instead of making the new exemption mandatory, HB1185 included an Opt-In provision. The Opt-In provision would allow a local tax jurisdiction by majority vote of its governing board to enact the new homestead exemption without additional legislative action required, but subject to a local referendum approving that the new homestead exemption be provided.
One senate bill and three house bills, all addressing much needed property tax relief for homeowners, were approved in their respective General Assembly chambers of origin and sent to the other chamber.
In this situation, the principal sponsors of each bill became involved in negotiations in an effort to reach a satisfactory resolution. All sponsors and supporters had honest motivations to achieve a satisfactory consolidation of their separate efforts.
House Bill 581 is the result of those good faith negotiations. There was nothing nefarious or ill-intended in the bill.
As a result of the negotiations about final HB581 content, the Opt-In provision originally in HB1185 was changed to an Opt-Out provision.
The thinking of the legislators was probably that very few tax jurisdictions will choose to Opt-Out because property tax relief for homeowners is so desperately needed.
If the optimism of the legislators is not justified, and the cynicism of many local voters is nearer to the truth, the legislators still hold the whip hand. The proposed property tax relief can still be enacted whether local tax jurisdictions like it or not.
The following is quoted from HB 581 (2024) Frequently Asked Questions Document provided by the Association of County Commissioners of Georgia & Georgia Municipal Association:
“If your local government opts out of the HB 581 floating homestead exemption and your legislative delegation disagrees with that decision, your local delegation can pass a local Act to impose a floating homestead exemption within the jurisdiction. HB 581 has not changed the ability of the legislature to create specific homestead exemptions for local governments. This local Act would be subject to 2/3 vote in the General Assembly and approval by the voters in a local referendum. If the referendum is successful, then your local government would be subject to the homestead exemption provided for in the local Act, even though you opted out of the HB 581 exemption.
Note: A local government could elect to opt out of the HB 581 exemption and ask their local
delegation to proceed with a more customized version of the homestead exemption.”
This essay summarizes my understanding (some of it speculative) of how and why House Bill 581 came to include the Opt-Out provision. The words are my own, except where clearly referenced.
If anyone has specific questions for me, please feel free to get in touch at JacksonWR@msn.com.
There is additional information at my facebook site related to valuation freeze exemptions, specifically focused on Bartow County where I live.
Bob Jackson
10/11/2024