Oconee County residents will have six chances starting on Thursday morning to tell their elected officials what they think about their decisions not to reduce property taxes to compensate for the effects of inflation on property values.
The Board of Education will hold the first of three public hearings at 10 a.m. on Thursday in the Board Meeting Room at the Superintendent’s Office, 34 School Street, Watkinsville.
The Board of Commissioners will hold its first public hearing at 6 p.m. on Aug. 6 at the Commission Chambers in the Courthouse in Watkinsville. The regularly scheduled Commission meeting will follow at 6:30 p.m.
The Board of Commissioners will hold subsequent hearings at that same location at 11 a.m. and 5:30 p.m. on Aug. 27. The regular Commission meeting will following at 6 p.m. on Aug. 27.
The hearings are required by state law because neither the Board of Education nor the Board of Commissioners rolled back the millage rates sufficient to compensation for the increase in property values due to inflation. The proposed millage rates, in effect, are not revenue neutral.
The hearings are unlikely to have any impact on either Board, as both have adopted budgets that took effect on July 1 that are based on the proposed millage rates.
As required by law, both the Board of Education and the Board of Commissioners ran advertisements in The Oconee Enterprise last week under the heading “Notice Of Property Tax Increase.”
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The Board of Education advertisement appeared on Page A8, while the Board of Commissioners advertisement appeared on page B5. Both advertisements were accompanied by a presentation of the 2019 Property Tax Digest and its five-year history.
The Enterprise is the legal organ of the county, or the place where government bodies in the county place required legal advertisements.
The city of Watkinsville ran its advertisement for its millage rate in the July 3 edition of the paper and held its public hearings on July 10 and 17.
The cities of Bogart, North High Shoals and Bishop have not yet run their advertisements.
The Board of Education and the county would not have to hold these hearings if the tax rates were increasing revenue solely from real growth, such as construction of new homes or businesses.
The hearings must be held because most of the new revenues the school system and county will be receiving–more than 60 percent--are the result of inflation.
Education Millage Rate Proposed
The proposed or “tentative” property tax rate for Oconee County Schools is 16.5 mills, down from the 17.0 millage rate for 2018.
Even with that drop, the millage rate is higher than what the Board of Education would adopt if it were to adjust for market forces, or the effects of inflation.
The rate the Board of Education would adopt if it were erasing the effects of inflation would be 15.957.
The difference between the proposed rate and 15.957 is 0.543. The increased from 15.957 to 16.5 is 3.4 percent.
The proposed millage rate will generate $35,875,920 for the county’s schools, up from $33,489,861 in 2018, or an increase of 7.1 percent.
The 16.5 millage rate will apply to all properties in the county, including those in the county’s four cities.
The Board of Education is scheduled to officially set its millage rate at its regular meeting on Aug. 12.
County Unincorporated Millage Rate
In addition to the property taxes for the county’s schools, the county itself as well as its four cities collect property taxes.
The proposed county property tax rate for those parts of the county not falling inside the city limits of Watkinsville, Bogart, North High Shoals or Bishop is 6.686 mills. This unincorporated tax rate is the same rate as in 2018.
The rate the Board of Commissioners would adopt if it were compensating for the effects of inflation would be 6.280.
The difference between the proposed or “tentative” millage rate and 6.686 is 0.406 mills, an increase of 6.46 percent.
County Incorporated Millage Rate
The proposed property tax for the operation of county government for those residents who live inside the county’s four cities is 7.626. The rate in 2018 was 7.646.
(City borders are different from postal addresses. Only 2,892 people live in Watkinsville, 1,091 live in Bogart (and some of those are in Clarke County), 733 live in North High Shoals, and 261 live in Bishop. The county’s population, including those cities, is 38,028.)
The rate the Board of Commissioners would adopt if it were adjusting for inflation would be 7.066.
The difference between the proposed rate and the rate without the effects of inflation is 0.560, reflecting an increase of 7.93 percent.
The unincorporated and incorporated millage rates will produce $14,540,385 in revenue for the county, or an increase of 10.3 percent from the 2018 revenue.
The Board of Commissioners is scheduled to official set its millage rates at its meeting on Aug. 27.
Meaning For Home Owner
County Tax Commissioner Jennifer Riddle prepared the information for the legal advertisements that appeared in the Enterprise last week announcing the hearings for the tax increases.
The advertisement for the Board of Education states the increase in the school tax (over what the rate would be if they were adjusted for inflation) would be $74.93 for a home with a fair market value of $350,000 with a homestead exemption.
The increase in the county tax for an $350,000 home in the unincorporated parts of the county would be $56.03 and the increase for a $350,000 home in the incorporated parts of the county would be $77.28. In both cases, a homestead exemption is included in the calculation.
Allen Skinner, chief appraiser for the county, told me in a telephone conversation yesterday that he gave Riddle the $350,000 figure because that is the average value of a home in the county. (The actual average is $357,000, he said.)
The average value of a new home, according to Skinner, is $408,000.
City Property Taxes
In addition to the county property tax, residents of the four cities pay a property tax for that city.
The rate in Watkinsville is 2.508. It is 2.878 for Bogart, 1.287 for North High Shoals, and 1.895 for Bishop.
In addition to the city property taxes, residents of the four cities have a higher property tax rate for county taxes than do residents who live outside the boundaries of the cities because of rollback calculations.
The gross millage rate for all of the county is 10.8260, but the residents of the unincorporated parts of the county get a rollback of 4.14 mills because of the existence of the Local Option Sales Tax as a revenue source and because of an insurance premium.
The residents of the four cities get a rollback of 3.20 for the Local Option Sales Tax but get no rollback for the insurance premium.
State 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.
Inflationary Vs. Real Growth
Skinner told me yesterday that every home owner this year will experience some increase in property value assessment and thus tax due to inflation, but the amount of actual increase is not uniform.
Skinner said the Property Appraisal Office made across the board adjustments this year based on the square footage of a home. The actual amount of adjustment is based on the size of the home and its “grade” or quality.
A home of 2,400 square feet in size and an average grade increased from $75 per square foot to $82.50 per square foot, reflecting increased cost of home construction.
In addition, the sale of a home in a subdivision or neighboring property could increase the assessment of the value of the property, Skinner said.
These increases are viewed as inflationary, that is, they reflect the effects of too much money chasing too limited of a supply, rather than real growth in property value.
Real growth occurs when improvements are made to a property, such as construction of a new home on a vacant lot or conversion of an agricultural property to a commercial use.
Calculation Of Real Growth--Schools
To calculate the rollback rate, Riddle completes a state form called a PT-32-1 Computation of Millage Rate Rollback and Precentage Increase In Property Taxes.
Riddle shared the form for 2019 with me today.
The forms are different for the computation of the school tax rollback and for the property taxes for the county because of differences in tax exemptions in the two.
For the school tax, the 2018 Net Property Digest was $1,969,991,832, and the 2019 Net Property Digest was $2,174,298,117.
Of the increase in the Digest, 65.3 percent came from reassessment of existing real property, that is, from inflation.
Calculation Of Real Growth--County
In the unincorporated parts of the county, for computation of the county tax, the Net Tax Digest increased from $1,757,120,559 to $1,938,689,531, with 64.8 percent of that growth coming from reassessment of existing real property.
In the incorporated parts of the county, the Net Tax Digest increased from $187,594,418 to $206,963,892, with 81.1 percent of the increase due to reassessment of existing property.
For the county as a whole, i.e., combining the unincorporated and unincorporated parts of the county, the Net Tax Digest increased from $1,944,714,977 to $2,145,653,423, with 66.4 percent of that increase coming from reassessment (inflation).
Real growth was only $67,571,843, compared with $133,366,603 from reassessment.