Not The GREAT Plan Anymore, But 2 Million Georgians Would See Taxes Slashed, Speaker Says

By Dick Pettys
InsiderAdvantage Georgia

(2/15/08) It’s no longer the GREAT plan - it’s the Property Tax Reform initiative - and it’s much less broad than originally designed. But even if the name has changed and the scope has narrowed, it still holds the promise of halving property tax bills for 2 million Georgia property owners, House Speaker Glenn Richardson told a legislative committee Thursday.

He testified for more than two hours to a subcommittee of the House Ways and Means Committee, offering a detailed public explanation of the details and thinking behind the latest version of his effort to cut property taxes.

The legislation is HR 1246, a constitutional amendment that would need voter ratification in November should it clear the House and Senate. The enabling legislation is HB 979.

“This little old bill doesn’t do much except help the taxpayers and the people of Georgia,” he said, arguing - as he has many times before - that the current tax system is out of date and inequitable.

He acknowledged that the reform effort was much harder than he anticipated when he took up the issue more than a year ago, hence the numerous revisions. And he said that if nothing else, the debate he has stirred over the topic proves its OK to take a searching look into the status quo and question whether it should be changed.

In a nutshell, here is what would happen if the new plan passes the Legislature and wins voter approval:

* Effective Jan. 1, 2009, Georgians no longer would pay ad valorem taxes on their personal cars and trucks. The state would reimburse counties for the revenue they lose.

* Effective Jan. 1, 2010, Georgia homeowners no longer would pay school ad valorem taxes. School systems would continue to set millage rates and bills would be issued, but the state would reimburse them penny-for-penny for the amount they otherwise would have collected from homeowners.

So where does the state get the money?

* In 2009, Georgians will start paying state taxes again on groceries, and lottery tickets would be taxed.

* In 2010, consumers will start paying sales taxes on services they use, most of which are not now taxed. There will be no sales tax on services like medical, education, child care and business-to-business transactions.

Just in case the numbers don't work the way Richardson expects, there is a sunset provision. The kill-clock would be set for Dec. 31, 2012, unless the Legislature voted before then to keep the plan in effect.

The first drafts of Richardson’s legislation, originally designed to eliminate all ad valorem taxes, drew intense opposition. Richardson acknowledged to the committee he subsequently made tweaks in an effort to attract votes.

As a constitutional amendment, the measure will require 120 votes in the 180-member House. Even if all Republicans support it, it still would need help from Democrats.

Complex as it is, it’s only one portion of what Richardson had previously outlined as a two-pronged approach to tax reform. The second part involves freezing property assessments to prevent back-door tax increases and capping spending increases at the local level to stall direct tax hikes without voter approval.

Two assessment freeze measures passed the Senate this week, one of them co-sponsored by Sen. Chip Rogers, the Senate Finance Chairman, who has been working with Richardson.

Richardson told the committee the Senate-passed measure will still need work, arguing that an assessment freeze without a spending cap is useless.

He fielded a number of questions from the committee, and several times made the argument that his new bill does no damage to the concept of local educational control but, instead, strengthens it. No school system will lose a penny, he contended, and for the first time the state will guarantee they receive the taxes they levy.

In response to one question, Richardson said he expects the state ultimately will lose the lawsuit filed by about 50 school systems challenging whether the state is adequately funding education, as the Constitution requires.

If that’s the case, he said, his tax plan provides a method by which the problem could quickly be fixed.