Georgia’s HB 581: A blueprint for Milwaukee property tax relief?

As homeowners across the United States grapple with rising property taxes, state legislatures are exploring ways to provide relief. In Georgia, House Bill 581 (HB 581) aims to limit future increases in a home’s taxable value, potentially easing the property tax burden for homeowners. Let’s examine the key details of HB 581 and explore its potential impact if a similar bill were introduced in Wisconsin, focusing on Milwaukee homeowners.

Understanding Georgia’s HB 581

Georgia’s HB 581 aims to provide property tax relief to homeowners by capping the annual increase in a property’s assessed value. Key details of the bill include:

1. The cap would be set at either 3% or the inflation rate, whichever is lower.

2. The cap would apply until the property is sold or transferred.

3. The bill is accompanied by House Resolution 1022, a proposed constitutional amendment that would authorize the General Assembly to enact the assessed value cap.

4. If voters approve in November, the measure could save homeowners hundreds of dollars in property taxes.

The Georgia House and Senate have both backed HB 581, with the Senate voting 52-0 and the House voting 164-2 in favor of the bill. Lawmakers have pushed for the bill in response to skyrocketing assessments in parts of metro Atlanta, where homeowners have seen double-digit increases in property tax revenue without local governments raising tax rates.

Under HB 581, the caps on unimproved property assessment increases could mean local governments and school districts must raise tax rates to maintain revenue. Still, some lawmakers argue this would make the process more transparent to homeowners.

Wisconsin’s Property Tax Landscape

Wisconsin homeowners face relatively high property tax rates compared to other states:

1. In 2021, Wisconsin’s average property tax rate was 1.61% of a home’s assessed value, ranking as the 8th highest in the nation.

2. In Milwaukee, the median property tax in 2021 was $4,018.18, based on a mill rate of 26.16 and a median home value of $153,600.

Home values in Wisconsin have seen significant increases in recent years:

1. Median home prices in the state rose from $144,000 in May 2013 to $294,000 in May 2023, doubling over the 10 years.

2. In Milwaukee, the citywide assessed value increased by 13.23% in 2022, with residential assessments rising nearly 18% on average.

These rising home values have increased property tax bills for many Wisconsin homeowners, even without local governments raising tax rates. This situation is similar to what has been observed in parts of Georgia, where HB 581 aims to provide relief by capping annual increases in assessed values.

As Wisconsin policymakers consider potential property tax relief measures, the experiences of states like Georgia, California (Proposition 13, 2% annual cap), and Florida (Save Our Homes amendment, 3% annual cap for homestead properties) could provide valuable insights into the potential impacts and challenges of implementing assessed value caps.

Potential Benefits and Drawbacks of a Bill Similar to HB 581 in Wisconsin

A bill similar to Georgia’s HB 581, which caps annual increases in property tax assessments, could have significant implications for homeowners and local governments in Wisconsin. Let’s explore the potential benefits and drawbacks in more detail.

Benefits for Homeowners

1. Slowing the growth of property tax bills: By capping annual increases in assessed values, a bill like HB 581 could help slow the growth of property tax bills for homeowners, even as market values continue to rise. This could provide much-needed relief for homeowners facing rapidly increasing property taxes.

2. Providing stability and predictability: With a cap on assessment increases, homeowners would have more stability and predictability in their property tax bills from year to year. This could help homeowners better plan their budgets and manage their finances, especially those on fixed incomes or with limited ability to absorb tax increases.

3. Preventing sudden, dramatic tax hikes: In areas with rapidly appreciating home values, like parts of Milwaukee and Wisconsin, an assessed value cap could help to prevent sudden, dramatic property tax hikes that can strain homeowners’ budgets. For example, if a home’s market value jumped 20% in a single year, the assessed value cap would limit the corresponding property tax increase.

Drawbacks and Considerations

1. Potential disparities between assessed values and market values: Over time, assessed value caps can create disparities between properties’ assessed values and market values. Properties owned for more extended periods may have assessed values that lag significantly behind their market values. In contrast, newer or recently sold properties may be assessed closer to market values. This can lead to inequities in the property tax burden, with some homeowners paying a more significant share relative to the market value of their property.

2. Possible inequities for newer or recently sold properties: Newer or recently sold properties may face higher assessed values and property taxes than properties owned for longer periods. This could create a disincentive for homeownership turnover and potentially impact the housing market.

3. Revenue constraints for local governments: If assessed values are not keeping pace with the cost of services due to the assessment cap, local governments may face revenue constraints. This could lead to reduced services, deferred maintenance on infrastructure, or the need to find alternative revenue sources, such as increasing fees or sales taxes. This could be a significant challenge in Milwaukee, where the city relies heavily on property taxes to fund services including Milwaukee Public Schools.

4. Need for careful consideration of cap rate and exemptions: Policymakers would need to carefully consider the specific cap rate and any exemptions or adjustments included in the legislation. A lower cap rate could provide more relief for homeowners but also exacerbate the potential drawbacks. Exemptions for certain types of properties or allowing for adjustments based on specific criteria could help mitigate some of the unintended consequences.

Learning from Other States with Assessed Value Caps

Several states have implemented caps on assessed value increases, providing valuable insights into such policies’ potential impacts and challenges.

 California’s Proposition 13

• Passed in 1978, Proposition 13 limits annual assessed value increases to 2% until a property is sold, which is reassessed at market value.
• While Proposition 13 has provided significant property tax relief for many homeowners, it has also led to disparities in tax burdens and reduced revenue for local governments.
• A 2016 report found that homeowners who had owned their properties for longer periods paid significantly lower effective tax rates than newer homeowners, with the disparity growing over time.

Florida’s Save Our Homes Amendment

• Passed in 1992, the Save Our Homes amendment caps annual assessed value increases for homestead properties at 3%.
• The amendment has provided property tax relief for many Florida homeowners, but it has also led to significant disparities in tax burdens between homestead and non-homestead properties.
• A 2006 study found that the amendment had shifted a larger share of the property tax burden onto non-homestead properties, such as businesses and rental properties.

Lessons Learned

The experiences of California and Florida highlight some of the potential long-term impacts of assessed value caps, including:

1. Disparities in tax burdens: Over time, assessed value caps can lead to significant disparities in property tax burdens between properties owned for longer periods and those newer or recently sold. This can raise questions of fairness and equity in the property tax system.

2. Reduced revenue for local governments: Caps can limit local government’s ability to generate revenue from property taxes by constraining the growth of assessed values. This can lead to funding essential services and infrastructure challenges, particularly in areas with high service demand or aging infrastructure.

3. Unintended consequences for housing markets: Assessed value caps can incentivize homeowners to stay in their properties longer to benefit from lower tax bills, potentially reducing housing turnover and impacting the housing market.

4. Need for periodic reassessments or adjustments: To mitigate some of the unintended consequences of assessed value caps, states may need to consider periodic reassessments or adjustments to the cap formula. For example, some states have implemented provisions for resetting assessed values when properties are sold or allowing for limited adjustments based on specific criteria.

In conclusion, while a bill similar to Georgia’s HB 581 could provide property tax relief for homeowners in Milwaukee and Wisconsin, policymakers must carefully consider the potential drawbacks and long-term implications. Learning from the experiences of other states with assessed value caps can help inform the design and implementation of such a policy, striking a balance between providing meaningful relief for homeowners and maintaining the fiscal health of local governments.

Implications for Milwaukee Homeowners

For Milwaukee homeowners, a bill similar to HB 581 could offer relief from rising property tax bills. However, there are concerns about potential shifts in the property tax burden and the impact on local government services and finances. Policymakers would need to carefully consider the specific provisions of such a bill, balancing the goals of property tax relief with the needs of local communities.

Conclusion

As Wisconsin homeowners navigate the challenges of rising property taxes, Georgia’s HB 581 offers a potential model for relief. By capping annual increases in assessed values, a similar bill in Wisconsin could provide stability and predictability for homeowners’ property tax bills, particularly in areas with rapidly appreciating home values like Milwaukee.

However, implementing such a policy would require careful consideration of the potential benefits, drawbacks, and long-term implications for local governments and communities. Policymakers would need to balance providing meaningful property tax relief and ensuring the financial stability of local governments to maintain essential services.

As the debate around property tax relief continues, the experiences of states like Georgia, California, and Florida offer valuable insights into the potential impacts of assessed value caps. By learning from these examples and engaging in thoughtful, data-driven policymaking, Wisconsin has the opportunity to craft a solution that meets the needs of homeowners while supporting the long-term health and vitality of its communities.

This article was researched and written with assistance from Perplexity AI