Newton County Chief Tax Assessor Tommy Knight said Tuesday that a natural decline in property values will account for about 5 percent of the drop. An additional 7 percent or 8 percent decline will be caused by S.B. 346, which requires local governments to appraise property at the price it was sold, including foreclosures and short sales.
The bill was hailed as a victory for Georgia homeowners by many, including sponsor Sen. Chip Rogers (R-Woodstock) and his colleagues, who unanimously approved the legislation in April.
The Atlanta Journal Constitution ran a multi-part series detailing how appraisers in metro counties were regularly overvaluing properties, but Knight said that's never been a concern in Newton County, because his staff reappraises every parcel each year.
"Like properties should be taxed alike. In my opinion, uniformity is taken out of the assessor's hands," Knight said. "It might sound good on paper, but most neighborhoods have resale prices that are all over the place. As a result, bills will now be all over the place."
Homes sold by banks after being foreclosed have differed in sales price by $150,000 in some neighborhoods, a $2,000 tax bill difference. When homes are in the same neighborhood and of similar size and style, Knight's staff is trained to value them similarly.
H.B. 233, passed in March, prevents house assessments from being increased even if the market shows an increase.
Increased Notice, Longer Process
The bill also requires governments to send an assessment notice to every homeowner, regardless of whether his property's value has changed, and recommends that governments include an estimated tax amount. Knight said the county will include estimated property taxes, including exemptions, but that process will be time intensive.
Property owners will have an extra 30 days to file exemptions and an extra 15 days to appeal an assessment. While assessments usually are sent out on April 15, they will likely be delayed until around May 18 this year. The new deadlines mean the digest can't be finalized before July 1, the start of many governments' fiscal years.
Knight said he expects industries and businesses to appeal their assessments. However, they normally only appeal when they get an assessment, which for those groups, is generally once every three to four years. Industry accounts contain millions of dollars of value, which will be in limbo every year, making it hard for public officials to accurately budget.
"Business hire consultants who file these appeals, because they have the mindset of flooding the system, hoping the county will want to resolve them instead of letting them go to court," Knight said.
Chairman Kathy Morgan said Thursday that many counties have to plan budgets before digests are finalized and Newton County will seek out their advice. She said the budget should be based on needs anyway, not how much money is available.
Two ways to deal with uncertainty are to have a larger fund balance and to have several contingencies built into the budget.
"We'll establish our priorities, and if we need to cut some department budgets an additional 2 percent to 3 percent, we'll be prepared," she said.
One of Knight's other concerns is that first-time homebuyers who find a great deal may have trouble making escrow payments when home values fall back into line. Escrow is an agreement between banks and homeowners, where owners are required to pay a monthly fee to a bank in order to ensure enough money will be available to pay annual property taxes.
If a family was to purchase a house for $50,000, its tax bill would be $553 and its monthly escrow payment would be $46. If the following year the value jumped to $100,000, the tax bill would increase to $1,245.
With that increase in valuation, the escrow payment would generally be $103. But when some banks see large increases in values they want to prepare for future increases. So instead of only raising the escrow payment by $57 a month, it might raise the payment by double that amount in anticipation of a similar increase the next year. A $160 monthly bill on top of a mortgage payment could be too much for a family that only purchased a house because of a good deal.
"They might find out they can't afford that house anymore," he said.