When the Oconee County Board of Commissioners releases the county’s budget on May 26, it also will release two millage or property tax rates–one for property in the county’s four cities and another for property in the unincorporated parts of the county.
Those rates are likely to be different–-as they have been for at least the last six years--with property owners in Bishop, Bogart, North High Shoals and Watkinsville paying the county more in taxes for a comparable piece of property than do owners of property elsewhere in the county.
The higher taxes the county charges property owners in the cities are on top of the property taxes the four cities levy themselves, and the county’s higher tax rate for cities produces money for the county’s coffer, not for the budgets of the cities.
The services the county provides the property owners in the cities are the same as the services it provides to property owners in the unincorporated parts of the county. Property owners in the cities simply pay more for those services.
The difference in the tax rates is relatively small, with the owner of a property in one of the four cities valued at $100,000 last year paying about $39 more per year than the owner of a property valued at $100,000 elsewhere in the county.
That difference last year produced $145,737 in revenue for the county it would not have gotten if the rates for the incorporated and unincorporated parts of the county had been same.
|Gets Premium Tax|
The loss of $145,737 is not trivial as the Board of Commissioners tries to close a $2.8 million gap between requests and projected available revenue for the fiscal year starting July 1.
Negotiations on that budget are taking place outside the public view. The final product of those negotiations will be revealed at the first public hearing on the Fiscal Year 2016 budget at 6:30 p.m. on May 26 at the Courthouse in Watkinsville.
Basis For Rate Difference
The county charges the differential tax rates for property in incorporated and unincorporated parts of the county because the legislature passed a law in 1997 allowing it to do so.
That law permits the county to reduce tax rates for unincorporated parts of the county to offset revenue the cities receive from a tax on insurance companies operating in the state that is over and above the amount the county receives from its tax on insurance companies.
The county gets less than 0.3 percent of the state revenue, based on its population, while Watkinsville, the largest city in the county, gets an additional 0.03 percent. Bogart gets an additional 0.01 percent. North High Shoals and Bishop get even less.
The reduction the county offers residents in the unincorporated parts of the county is unlikely to be offset by the revenues the cities receive, particularly in tiny North High Shoals and Bishop.
But that calculation is not something local officials engage in as they set the tax rates for the incorporated and the unincorporated parts of the county.
Haygood On Differences
I started asking about the differential property tax rates earlier this year out of curiosity. I live in an unincorporated part of the county, and I was curious why those who live in Watkinsville or in the county’s three other cities pay more in property taxes.
I started by asking Allen Skinner, chief appraiser in the Oconee County Property Appraisal Department.
He said he didn’t know the reason for the difference or how it was calculated and referred me to County Attorney Daniel Haygood and County Finance Director Wes Geddings.
Haygood told me in response to an email message I sent him in early February that the difference in rates “has to do with a state law dealing with fees the cities charge to insurance companies which the counties cannot charge.”
“The legislature ‘evened’ things up by providing for a differential millage rate,” Haygood said.
Geddings On Difference
Haygood said that county Finance Director Wes Geddings and County Administrative Officer Jeff Benko, who preceded Geddings as finance director, could give me a “better answer.”
I sent an email to both on March 20, and Geddings responded that same day by sending me a “slide” from a PowerPoint presentation showing the county’s millage rates in the unincorporated parts of the county going back to 2004.
“Incorporated portions of the county typically provide additional service, such trash pickup, leave/limb disposal, etc.,” he added. (The text is as he sent it.)
The county does not provide any of these services to either the incorporated or unincorporated parts of the county, so I responded by asking Geddings how the differences in the rates for the incorporated and unincorporated parts of the county were calculated.
He referred me back to Skinner.
“Recommend you use that resource for calculation specifics,” Geddings wrote.
Benko On Difference
I next asked Benko for an explanation, at first in person and then via an email message on March 26.
That evening, at a meeting on the possibility of citizen involvement in monitoring of the county’s Special Purpose Local Option Sales Tax, Benko told me the reason for the differential rates was that the county provided fire protection to the four cities and showed me some documents that he said explained that.
He actually gave me those document at the Board of Commissioners meeting on March 31.
|It's Not The Fire Trucks|
Included was a copy of the 1997 law that said counties could spend proceeds from the state tax on insurance premiums to provide to unincorporated parts of the county a variety of urban services, such as fire and police protection, solid waste collection, or curbs, sidewalks and street lights.
Or the insurance premium proceeds could be used to reduce property taxes on the inhabitants of those unincorporated parts of the county.
The county somewhere in the past opted to reduce property taxes.
The provision of fire protection to the cities does not seem to play any role in the differential tax rates, as the service is the same in all parts of the county.
Impact For Property Owners
Property taxes are complex, and the rollback in taxes in the unincorporated parts of the county only adds to that complexity.
In the table below, the millage rates for 2014 are show, with the gross millage rate of 10.996 in the second column from the left.
|Click To Enlarge|
This is the beginning point for calculation of the tax rate for the county.
Millage rate is the amount of tax per $1,000 in property value. That means 1 mill is equivalent to $1 in taxes per $1,000 in taxable value.
Oconee County voters approved a Local Option Sales Tax (LOST) of 1 percent in 1982, with the purpose of reducing the county’s reliance on property tax. Last year, as a result, 52 percent of revenue for the county’s general fund came from sales tax proceeds.
As a result of passage of LOST, the county rolled back the property tax by 30 percent, which is reflected in the third column in the table.
The fourth column shows the .986 rollback in the millage rate that the county applies to the unincorporated parts of the county because of the insurance premium tax.
The resulting millage rates for the incorporated and unincorporated parts of the county are reflected in the fifth column. For the incorporated parts of the county, that net rate is 7.666. For the unincorporated parts of the county, that rate is 8.686.
The county’s millage rate is small compared to the millage rate for the schools of 17.5, shown in the sixth column.
The seventh column shows the millage rates for the four cities.
The state millage rate is in the eight column.
The total millage rates are in the ninth column.
Tax For $100,000
Column 10 shows the calculated tax last year for a property with an assessed valued at $100,000.
In Georgia, property is taxed at 40 percent of its assessed value.
The tax for a property valued at $200,000 would be double what is shown in column 10, and a property valued at $400,000 would be four times the value shown.
Column 11 shows the tax for those properties in the cities if they had the same insurance premium rollback as is given to property in the unincorporated parts of the county.
The difference is $39.20 in all of the cities.
That amount would be doubled for a $200,000 property and four times that figure for a $400,000 property.
Column 12 applies a simple homestead reduction of 5 percent of the calculated tax in Column 10. This applies if the owner lives in the property.
Additional exemptions based on age and income of the home owner are not shown.
Column 13 shows the change in value if the county extended the tax rollback for insurance premiums to all properties in the county.
The difference is $37.24.
The formulas used in the computations are visible in the Excel file saved here.
Rates To Be Set
The county will set the millage rates later this year, but they are the cornerstone of the budget to be released on May 26, since they determine the revenue projected to be available to the county from property taxes.
At its meeting on May 11, the Oconee County Board of Education voted to approve its Fiscal Year 2016 Tentative Budget.
The approved budget provides a 2 percent salary increase for all Oconee County School employees
It also reduces the millage rate for schools from 17.5 to 17.0.
Impact For County
The Oconee County Board of Commissioners also is considering salary increases, but it is under pressure to increase, not decrease, the county’s millage rate.
The Board could set the tax for the incorporated and unincorporated parts of the county at the same millage rate, since the law does not require the county to make the reduction for the premium tax.
That has not happened going back at least to 2009, according to information Benko released to me on March 31.
Last year, the county’s budget was based on collecting $10,079,788 in property taxes.
Had the tax rate for the incorporated parts of the county been the same as the tax rate for the unincorporated parts of the county, the county would have collected $145,737 less, or a reduction of about 1.5 percent.