How We Are Funded
Since counties and municipalities are creations of the state, their capacity to generate revenues is determined by specific revenue-raising authority granted to them under the Georgia Constitution and state law. Taxes constitute the largest source of general revenue for most local governments in Georgia.
Counties and municipalities are authorized by the state constitution to levy and collect a general ad valorem (“according to value”) property tax within their jurisdictions. Ad valorem taxes are levied on real property such as land and buildings; personal property, including cars, boats, machinery, and the inventoried goods of a business; and on intangible property, including long-term real estate notes such as mortgages and deeds to secure debt and the transfer tax imposed on the sale of real property.
Georgia law generally requires that tangible real and personal property be assessed at 40 percent of its fair market value. Exceptions apply to special types of property such as historic property, conservation use property, some agricultural use property, and standing timber. The tax rate is stated in terms of “mills,” with ten mills equal to 1 percent of a property’s assessed value. The amount of taxes due from an individual property owner is the tax rate multiplied by the assessed value of the property. County and city governing authorities set the ad valorem tax (millage) rate by dividing the amount of money the local government needs from property taxes by the amount of the digest, which is the value of all property in the jurisdiction.
Exemptions from the ad valorem tax include public property, places of worship, institutions of public charity, household furniture, personal clothing, and items of tangible personal property (except motor vehicles, trailers, and mobile homes) with a value of less than $500. Georgia also has a residential homestead exemption.
Sales and Use Taxes
Four different local-option sales and use taxes may be levied by local governments on the purchase, sale, rental, storage, use, or consumption of tangible personal property and related services. All local-option sales taxes must be approved by the voters in the jurisdiction. Counties and cities are subject to a 2 percent cap on the amount of local sales taxes they may levy.
The joint county and municipal local-option sales and use tax (LOST) is disbursed on the basis of a percentage negotiated by the county and the city governments within that county. Proceeds of this tax must be used to reduce the millage rate. All counties and municipalities must renegotiate the distribution of this tax every ten years.
The special purpose local-option sales and use tax (SPLOST) is a county tax; however, before holding a referendum to enact such a tax, counties must meet with all cities located within their boundaries to discuss the inclusion of city projects in the referendum. State law specifies the types of capital projects that this tax may fund: roads, streets, and bridges; a county courthouse, civic center, hospital, jail, library, or coliseum; a cultural, recreational, or historic facility; a water or sewer project; the retirement of existing debt; and public-safety or airport facilities. The referendum must specify the purpose of the tax, the length of time it will be imposed, and the amount of revenue it will raise. This tax can be levied for five years or until it produces the amount of revenues specified on the ballot.
Counties that do not levy a local-option sales and use tax are authorized to impose the homestead-option sales tax (HOST). This tax must be imposed in conjunction with an additional homestead exemption. Both the tax and the exemption must be approved by the voters. Proceeds of this tax must be used to fund capital projects and services equal to the revenue lost to the homestead exemption. Any excess revenues must be used to adjust the millage rate.
The sales tax for educational purposes (STEP) is levied by boards of education; the revenues are not distributed to county government. The board of education of a county school district (or if there is an independent city school district, the county school board jointly with any independent boards of education) may impose a 1 percent sales tax for educational purposes. In the case of a joint county-city tax, the proceeds are distributed proportionally between county and independent school districts according to enrollment. Proceeds must be expended for capital projects for educational purposes or retirement of the system’s existing general-obligation debt. Excess proceeds must be used to retire school-system debt, or if there is none, to reduce the millage rate. This tax is not subject to the 2 percent cap on local sales taxes.
Generally, a county may tax businesses and practitioners of professions or occupations if the business or practitioner maintains a location or office within the unincorporated area of the county; a city may tax such businesses or practitioners only if they maintain a location or office within its corporate limits. State law provides four approved methods for local government taxation of businesses and practitioners and authorizes the imposition of regulatory fees or license fees on certain businesses and professions.
Cities are authorized to impose franchise taxes on electric, gas, telephone, cable television, and any other public utilities within their boundaries, but counties are permitted to levy franchise taxes only on cable-television systems in their unincorporated areas. The amount of franchise fees is generally negotiated between the local government and the franchisee.
Georgia cities and counties may also levy excise taxes on alcoholic beverages, mixed drinks, insurance premiums, hotel-motel rooms, and rental motor vehicles.
Other types of revenues available to counties and municipalities include fines, forfeitures of money posted to guarantee appearance in court, and court fees and costs. Local governments may also earn interest from investment of their idle funds. Counties and municipalities may charge their citizens or other governments for such services as water, sewer, solid-waste collection, and recreation. Local governments may also charge 911 user fees for telephones and cellular phones, building-permit fees, alcoholic-beverage-license fees, development-impact fees to finance new public facilities needed to serve new growth and development, and motor-vehicle tag collection fees. Counties and, to a lesser extent, cities may also be entitled to proceeds from the sale of confiscated contraband property, but these proceeds generally must be used for law-enforcement purposes. Counties and cities receive funds from federal and state government in the form of grants and often from other local governments in the form of user charges.
Counties and municipalities may borrow funds to meet operating expenses and to finance capital projects. They may use promissory notes for loans payable by the end of the year from general county or city funds, or they may issue general-obligation bonds repayable from general county or city funds or revenue bonds repayable from a particular source of revenue. The state constitution and state law impose a number of legal restrictions on the ability of local governments to borrow money. County and city indebtedness is limited to 10 percent of the assessed value of all taxable property located in the jurisdiction. As a general rule, voter approval is required for a county or city to incur new general-obligation debt.
Several distinct entities are involved in the ad valorem tax process:
The County Tax Commissioner, an office established by the Constitution and elected in all counties except two, is the official responsible for receiving tax returns filed by taxpayers; receiving and processing applications for homestead exemptions; serving as agent of the State Revenue Commissioner for the registration of motor vehicles; and performing all functions related to billing, collecting, disbursing, and accounting for ad valorem taxes collected in the county. In Stephens County, the tax assessors have been lawfully delegated with receiving tax returns.
The County Board of Tax Assessors, appointed for fixed terms by the county commissioner(s) in all counties except one, is responsible for determining taxability, value and equalization of all assessments within the county. The County Board of Tax Assessors notifies taxpayers when changes are made to the value of the property; receive and review all appeals filed; and insures that the appeal process proceeds properly. In addition, they approve all exemptions claimed by the taxpayer.
The County Board of Equalization, appointed by the Grand Jury, is the body charged by law with hearing and adjudicating administrative appeals to property values and assessments made by the board of tax assessors (Note: An arbitration method of appeal is available to the taxpayer in lieu of an appeal to the board of equalization at the option of the taxpayer at the time the appeal is filed).
The Board of County Commissioners ), an elected body, establishes the budget for the county government operations each year, and levies the mill rate necessary to fund the portions of the budget to be paid for by ad valorem tax.
The County Board of Education, an elected body, establishes the annual budget for school purposes and then recommends their mill rate, which, with very few exceptions, must be levied for the school board by the county commissioner(s).
The State Revenue Commissioner exercises general oversight of the entire ad valorem tax process. In addition, the State levies ad valorem tax each year in an amount, which cannot exceed one-fourth of one mill (.00025).
Taxpayers are required to file at least an initial tax return for taxable property (both real and personal property) owned on January 1 of the tax year. In Stephens County, the time for filing returns is January 1 through April 1. These returns are filed with the Tax Assessors office and forms are available in that office. The tax return is a listing of property owned by the taxpayer and the taxpayer’s declaration of the value of the property.
Once the initial tax return is filed, the law provides for an automatic renewal of that return each succeeding year at the value finally determined for the preceding year. The taxpayer is required to file a new return only as additional property is acquired, improvements are made to existing property, or other changes occur. A new return, filed during the return period, may also be made by the taxpayer to declare a different value from the existing value where the taxpayer is dissatisfied with the current value placed on the property by the Board of Tax Assessors. This serves the purpose of establishing the taxpayer’s appeal rights if the Board of Tax Assessors change the declared value again.