WNEG News HB581 Special Report: Homestead Exemptions, FLOST and Local Actions

WNEG News has provided extensive coverage regarding the House Bill 581 Legislation and associated impacts, both prior to the November 2024 General Election, and since the passage of Constitutional Amendment 1 that was on the General Election Ballot. 

Today, we will provide a brief overview of the bill; a review of the public hearings previously held by local taxing authorities, including comments made by public officials and citizens during those public hearings; a schedule of upcoming public hearings; and a list of questions most commonly asked by WNEG News listeners and readers regarding the legislation, along with responses to those questions, based on research conducted by WNEG News. 

For reference, from 2018 to 2023, the total assessed value of property across Georgia rose by nearly 61%, according to figures from the Georgia Department of Revenue. Statewide property tax collections rose 44% from 2018 to 2023. 

In response, the Georgia General Assembly passed H.R. 1022 and HB 581 during the 2024 legislative session, with the stated purpose of providing property tax relief to some Georgia property owners by trading lower property taxes for higher sales taxes. 

Constitutional Amendment Vote

With the passage of that legislation in the Georgia General Assembly, a ballot measure titled “Constitutional Amendment 1” was placed on the November 2024 General Election ballot in all voting precincts in Georgia, reading, “Shall the Constitution of Georgia be amended so as to authorize the General Assembly to provide by general law for a state-wide homestead exemption that serves to limit increases in the assessed value of homesteads, but which any county, consolidated government, municipality, or local school system may opt out of upon the completion of certain procedures?”

In Stephens County,12,280 citizens voted on the ballot measure; 58.59% of them, or 7,195 voters, voted to pass the Constitutional Amendment, while 41.41%, or 5,085, voted against the Constitutional Amendment.  

In neighboring Franklin County, 11,539 citizens voted on the ballot measure; 58.77% of them, or 6,781 voters, voted to pass the Constitutional Amendment, while 41.23%, or 4,758 voters, voted against the Constitutional Amendment.   

Statewide, 4,917,851 citizens voted on the ballot measure; 62.92% of them, or 3,094,322, voted to pass the Constitutional Amendment, while 37.08%, or 1,823,529, voted against the Constitutional Amendment.  

 

HB581 – 3 Components

There are, in general terms, three parts to the legislation; a cap on the increase in the assessed value of homestead properties; a process by which local municipalities and counties can institute a Floating Local Option Sales Tax – essentially a sales tax of up to 1 penny – to offset the loss of taxing authority revenue due to the property valuation cap; and a set of procedural regulations relating to assessments, tax bills and other housekeeping matters. 

 

Component 1: Statewide Homestead Exemption

For municipal, county and school taxing authorities in Georgia that Do Not opt out of the Homestead Exemption as legislated by HB581 by the deadline of March 1, the first portion of the legislation is designed to limit annual increases on the assessed – or taxable – value of homesteads to no more than a rate of inflation specified each year by Georgia Revenue Commission officials – with the Consumer Price Index being the most commonly indicated inflation measure. For reference, the annual inflation rate in Georgia in December 2024 was 1.9%.

As explained by the Georgia Public Policy Foundation, “For example, if the base year value of the home is $400,000, and the following year the fair market value has increased to $425,000, the millage rate would not be levied against $425,000. Rather, in this proposed system, the home value would be determined as $400,000 multiplied by the inflation rate (likely the Consumer Price Index) over the previous year. So, if the CPI was 3%, then the taxable value of that home would now be $412,000, instead of $425,000 under the current system (this example does not take into account any existing homestead exemptions).”

If the property is sold or transferred other than to a spouse, the assessed value will then be set at the fair market value of that property at the time of the sale, and any subsequent year increases to that value will be capped at the set inflation rate.  

Alterations to property (such as improvements to the home, a new building on the property, or the loss of a building on the property) are added to or subtracted from the value at time of the alterations, but are then subject to the limitation on increases in assessed value.  Any substantial change will increase or decrease the adjusted base year value of the home. For example:  The adjusted base year value of a home as of January 1, 2028, was $500k.  During 2028, the homeowner doubles the square-footage of her home and adds a swimming pool.  As of January 1, 2029, the tax officials for the county determine that the changes to the home increase the value by $200k.  The adjusted base year value for the 2029 tax year = $500k (the 2028 ABYV) + $200k (substantial change value) + any applicable inflation factor. In 2030, the value of the home will be $700k, plus whatever inflation rate was determined for the prior year. 

Because the assessment is largely based on the market value at the time the property was purchased, the term acquisition value system is used to describe this process as opposed to the more traditional fair market value system.”

 

Component 2: FLOST

In the second part of the legislation, existing state law regarding sales taxes was amended, increasing the previous two-penny local sales tax limit to three pennies, This amendment allows city and county governments that Do institute a Homestead Exemption to hold a future referendum for a Floating Local Option Sales Tax (FLOST). This FLOST is not automatically implemented for taxing authorities, it must be passed by local voters in an upcoming election. 

School systems, whether they opt out of the Homestead Exemption legislation or not, cannot participate in the FLOST under this legislation.

Component 3: Housekeeping

The third portion of the legislation dictates how property tax bills are formatted and what information is included on them, mandates that every parcel of property in the county be appraised every three years, and institutes changes in the appeals process.  

 

LOCAL ACTION

The Stephens County School System/Board of Education has announced its intention of opting out of HB581 and the Homestead Exemption. As of January 31, about 85% of Georgia’s 178 school districts have announced plans to opt out of House Bill 581. 

On Jan. 16, the Stephens County Board of Education (BOE) held the first of the three public hearings that are required to be held prior to March 1 in order for a taxing authority to have the ability to opt out of the legislation. 

Stephens County School Superintendent Connie Franklin and Finance Director Emily Bennett presented information regarding the Board’s decision to opt out.

Bennett outlined HB581 and its components.

Franklin also reviewed the legislation

Franklin talked about the connection with the School System’s SPLOST and other school funding, including state funding formulas.

The second BOE Public Hearing on HB 581 was held on Jan. 21. No members of the public spoke at either of the first two Public Hearing. The third and final Board of Education Public Hearing on HB581 will be held at 5:15 p.m. on Thursday, Feb. 13 at  the Stephens County Board of Education Central Office, located at 191 Big A School Road in Toccoa. Board members are expected to vote to opt out during the regular meeting immediately following the public hearing. 

The Toccoa City Commission announced last month that city officials were undecided on whether the city would opt out of HB581, but would hold the required three public hearings necessary to opt out, for the purpose of hearing from citizens and deciding the proper action for the city to take prior to the March 1 deadline. The first Public hearing was held on Jan. 27. Citizen David McGlumphy spoke during the hearing, asking commissioners to abide by the results of the Nov. election and take part in the Homestead Exemption and other aspects of HB 581.

Mayor Terry Carter in response to a question from a citizen, gave a brief overview of the legislation and the Commission’s thoughts on the matter.

Carter also said that some taxing authorities could benefit more than others from the Exemption.

He also spoke of concerns about asking taxpayers to pass the FLOST when there is already a planned SPLOST referendum scheduled for this year.

The second City of Toccoa Public Hearing on HB581 will be on Feb. 10 at 5 p.m., with the third hearing scheduled for 6 p.m. on Feb. 27, with Commissioners expected to vote on the matter during the regular meeting immediately following the hearing. 

City commissioners, during a discussion of meeting schedules, indicated that the Commission was interested in hearing the decision of the Stephens County Board of Commissioners before they made their decision on the subject. 

The Stephens County Board of Commissioners held the first public hearing on HB581 on Jan. 28. McGlumphy also spoke before the Board, repeating his message to the Toccoa City Commission and asking the Board to vote in compliance with the election results. 

WNEG News spoke with Board Vice Chair Chris Rickman following the public hearing, asking him what, to him, were the important issues to consider when making this decision.

WNGE News also spoke with County Administrator Christian Hamilton regarding the Board’s efforts to take all aspects of the legislation, and citizen input, into consideration. 

The 2nd Stephens County Board of Commissioners Public Hearing on HB581 will be held at 6 p.m. on Tuesday, Feb. 11 with the third and final public hearing scheduled for 6 p.m. on Tuesday, Feb. 25.  All public hearings will be held at the Stephens County Historic Courthouse, 37 W. Tugalo Street in Toccoa. 

Hamilton also mentioned that the Town of Martin has announced the schedule for the three required public hearings necessary to have the ability to opt out, but have indicated that town officials have not yet made a decision on the matter, and are looking to hear input from citizens and learn the decision of the County Board of Commissioners before making their decision. 

The Town of Martin Public Hearings are Scheduled for 5:30 p.m. on Feb. 3, Feb. 10 and Feb. 17 at Martin Town Hall, 3707 Historic Hwy 17 in Martin.

 

Q&A

Following is a list of questions frequently posed to WNEG News by listeners and readers, and a response based on WNEG News research.

Would this exemption apply to all properties in the county?

No, this legislation only applies to homesteads; commercial, industrial and agricultural properties are not affected, nor are any non-homestead residences (for example, second homes, vacation homes, or rental homes).

Does this legislation impact the millage rate set by local taxing authorities (municipal, county, school)?

No, Millage rates would still be determined at the local level by the taxing authorities, and this specific legislation places no restrictions or regulations on that rate.  (other regulations would still be in place, such as the statewide limit to school system millage rates at 20 mils)

Does this legislation set the value of a property?

No, the base year value of a property (2024) would still be what was determined by the Stephens County Tax Assessor, based on the property’s fair market value. The legislation would just limit the percentage by which that value could increase each year. The amount the value of the homestead could increase each year would be capped at a rate of inflation determined each year by the State. 

What rate would serve as the cap?

The percentage increase would be determined by an inflationary index chosen by the Revenue Commissioner of the state of Georgia – a non-elected position.  Although the Consumer Price Index is the most commonly-referenced index in relation to HB581, the legislation stipulates that the Revenue Commissioner can choose the index on which to base each year’s rate. 

What Exemptions are currently available in Stephens County.

According to the Stephens County Tax Assessors Website, the following exemptions are available, based on qualifications, for properties located inside the county borders:

  • Standard Homestead Exemption
    The Home of each resident of Georgia that is actually occupied and used as the primary residence by the owner may be granted a $2,000 exemption from state, county and school taxes except for school taxes levied by municipalities and except to pay interest on and to retire bonded indebtedness. The $2,000 is deducted from the 40% assessed value of the homestead. The owner of a dwelling house of a farm that is granted homestead exemption may also claim a homestead exemption in participation with the program of rural housing under contract with the local housing authority. (O.C.G.A 48-5-44)
  • Senior Homestead Exemption
    Individuals 65 years of age or over may claim an additional local exemption from state, county and school ad valorem taxes.
  •  Senior Homestead Exemption – Limited Income
    Individuals 65 years of age or over may claim an additional local exemption from state, county and school ad valorem taxes if the net income of that person and their spouse does not exceed $10,000 for the prior year.
  • Senior Homestead Exemption – Limited Income (Education-Related Taxes)
    Individuals 62 years of age or over that are residents of each independent school district may claim an additional exemption from ad valorem taxes for educational purposes and to retire school bond indebtedness if the net income of that person and their spouse does not exceed $10,000 for the prior year. 
  • Senior Floating Inflation-Proof Exemption
    Individuals 62 Years of age or over may obtain a floating inflation-proof state and county homestead exemption, except for taxes to pay interest on and to retire bonded indebtedness, based on natural increases in the homestead’s value. If the appraised value of the home has increased by more than $10,000, the owner may benefit from this exemption. Income, together with spouse or any other person residing in the house, can not exceed $30,000. This exemption does not affect any municipal or educational taxes and is meant to be used in the place of any other state and county homestead exemption.  
  • Homestead Exemption for Disabled Veterans
    Any qualifying disabled veteran may be granted an exemption of $50,000 from paying property taxes for state, county, municipal, and school purposes. The value of the property in excess of this exemption remains taxable. This exemption is extended to the unremarried surviving spouse or minor children.  
  • Homestead Exemption for Unremarried Surviving Spouse
    The surviving spouse of a member of the armed forces who was killed in any war or armed conflict will be granted a homestead exemption from all ad valorem taxes for state, county, municipal and school purposes in the amount of $50,000. The surviving spouse will continue to be eligible for the exemption as long as they do not remarry.  

Full details on each of these exemptions is available on the Stephens County website.

Will the implementation of the Statewide Floating Homestead Exemption impact any of the exemptions currently available to property owners in Stephens County. 

According to a statement issued by the Georgia Public Policy Foundation, “Importantly for Georgians concerned about the impact on their existing local homestead exemption, the calculation that ultimately takes precedence is the one more beneficial for the taxpayer, whether it is this proposed model (if enacted) or an existing floating exemption that provides greater tax relief. As for those local governments with frozen homestead exemptions, they will remain in place. In short, this bill is designed for the homeowner to come out better than or the same as today, not worse.”

According to information provided by The Georgia Municipal Association, or GMA, and the Association County Commissioners of Georgia, or ACCG, HB 581 does not eliminate any existing homestead exemptions for any jurisdiction, regardless of the type of homestead exemption, but it may override existing floating, base-year, and frozen exemptions, if the HB 581 exemption provides a greater benefit to the taxpayer. 

If your local government has an existing non-floating homestead exemption, such as an exemption for $5,000 of assessed value, that will be unaffected by HB 581. The floating homestead exemption is calculated first, and then the non-floating exemptions are calculated on the back end.  That said, if the existing, non-floating local homestead exemption says that it may not be applied in addition to any other homestead exemption, then it may not be applied. 

If your local government has an existing base-year homestead exemption, then the taxpayer will receive whichever provides them with the largest benefit in any given year.  Your tax assessor’s office will be responsible for tracking both floating homestead exemption values in addition to the fair market value. For example, if there is an existing base-year or floating homestead exemption that does not have inflationary increases, then it would generally provide the larger benefit to the taxpayer.  Similarly, if the base-year of a homestead exemption that is comparable to HB 581 pre-dates HB 581’s base-year, then the older base year will likely provide the larger benefit. 

Further details on the impact to existing exemptions can be found on this document.

How long will the HB581 floating homestead exemption be in effect?

If a jurisdiction elects not to opt out of the HB 581 homestead exemption, they will not have an opportunity to opt out in the future and will have the homestead exemption permanently.  

Will the County be able to impose a FLOST if Toccoa opts out of the Homestead Exemption granted by HB581, or, vice versa – will Toccoa be able to impose a FLOST if Stephens County opts out of the Homestead Exemption?

No, if a city that imposes a property tax (locally, that includes Toccoa and Martin) opts out of the Homestead Exemption, then the county and all cities within the county will be ineligible for the FLOST.  Likewise, if the County opts out, Toccoa would be ineligible for the FLOST.  Likewise, even in all eligible taxing authorities Opt in, if voters in even one taxing district fail to pass the FLOST, it would not be permitted in any of the taxing districts. 

If Approved by Voters, how long does the FLOST last?

FLOST may only be implemented for up to 5 years at a time; after 5 years, it must be renewed. Renewal requires a local Act of the General Assembly, a new IGA, and passage in a local referendum. Since FLOST is sales tax being used to offset property tax, if the FLOST expires and is not renewed due to failure to obtain a local Act of the General Assembly, failure to secure a new Intergovernmental Agreement, or the residents do not pass the FLOST in a renewal vote,  the local government will have to cut expenses and/or raise property taxes to meet their budget. 

If a local municipality, county or school board opts out of the HB581 floating homestead exemption, can state legislators reverse the “opt out.”

If a local taxing authority opts out of the HB 581 floating homestead exemption and your legislative delegation (State Senator and State Representative) disagrees with that decision, that  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 – see next question)

If a municipality or county opts out of the Statewide Homestead Exemption authorized by HB581, can that city or county institute a similar local homestead exemption?

Yes, a local taxing authority can opt out of the Statewide Homestead Exemption as authorized by HB581, and then implement the county and/or city’s own exemption. Implementation of similar local homestead exemption would require local legislative action in which the state Senator and Representative for the district would introduce legislation in the General Assembly to approve the local exemption; if approved by the General Assembly, the exemption would then be placed before voters in a local election. 

Several Counties and Cities in Georgia have discussed this option during HB581 Public Hearings, where it was pointed out that the benefits of a local exemption, as opposed to joining the statewide exemption, include the ability to set a defined inflation rate, as opposed to being subject to whatever rate is determined annually by state officials, as well as the ability to terminate the exemption, through local legislation and referendum, as opposed to the HB581 exemption, which has no sunset, and will be permanent unless a taxing authority opts out by March 1. 

If a municipality or county elects to opt out of the HB581 Exemption, and then institutes a local exemption, would the taxing authorities still be able to implement the HB581 FLOST?

Yes, HB581 specifies that cities and counties will have the opportunity to institute the FLOST if they take part in the Statewide Homestead Exemption OR similar exemption. The FLOST would still have to go through the same voter approval for adoption, and would still require renewal – with local legislative action and local voter approval – every 5 years.

Will the market value or the adjusted base year value be used when calculating value increases to the tax digest that are factored into the rollback millage rate that cannot be exceeded without advertising a tax increase? 

The digest value for rollback purposes utilizes the net taxable digest, which is the value of the digest after exemptions are accounted for. 

Statements Regarding HB581 from other Georgia Governmental entities and officials 

  • The benefit to homestead property owners would increase over time as long as they own the property.
    The benefit is also not equitable from the beginning, if ALL homestead properties are not valued properly. (Loundes County)
  • Taxes on other properties (rentals, businesses, farms, etc.) would increase to make up for the benefit to homestead properties. This could have a substantial negative impact on business, industry, affordable housing, rental rates, and the local agricultural community. (Savannah)
  • Tax inequities would be created based on long-term ownership versus newer ownership. (Multiple)
  • The exemption may disincentivize sale of homestead properties. It may also disincentive the recruitment or expansion of businesses to the county.  (Loundes County)