Eric J. McFee, Ed.D.
Recent property tax notices may have left you with concerns about rising costs. While it’s easy to assume that local government agencies, including schools, have raised taxes, the reality is more complex. In fact, the tax rates have remained the same. The real issue is the significant increase in property values, which have been undervalued for years. In this blog, I’ll explain how these changes impact your taxes, why property revaluation is necessary, and why this is a property value issue, not a tax rate problem.
Arthur Godfrey once said, “I’m proud to be paying taxes in the United States. The only thing is, I could be just as proud for half the money.” I agree—half the amount would be fabulous. So why am I hearing all this local chatter that I might be paying double in taxes? The government already gets enough of my money.
Property Tax Notices: What’s Really Going On?
As Superintendent of Schools, part of my job is understanding how the tax system works. What I’ve learned is that there are so many moving parts, it can make your head spin. Let me try to explain what’s happening, without assigning blame or criticizing past decisions. While the effects of this situation will be felt in our taxes, it’s not exactly an issue of a “tax” increase.
Everyone is receiving their property tax notices, which might give the impression that local entities—such as the schools, county government, and city government—have raised taxes. But we haven’t. The tax rate on your notice is the same as last year. Until property appraisals are official, we can’t set a new tax rate. What has changed, however, is the value of your property.
The Issue of Undervalued Properties in Grady County
The problem is that properties in Grady County have been undervalued for many years. The Fair Market Value (FMV) of your home and land is supposed to be based on local sales prices, and property taxes are calculated on 40% of that value. Each local agency sets its own millage rate. Last year, the school system’s rate was 13.4 mills, meaning that if your house is valued at $100,000, you paid 13.4 mills on $40,000, which equals $536 in taxes.
Why the Sudden Spike in Property Values Hurts
What’s hard to swallow isn’t that property values are increasing—I’ve always known they would—but that they’ve jumped so much all at once. It’s a serious hit to the wallet. The last reevaluation of our properties was in 2007—seventeen years ago. The minimum recommended reevaluation period is every five years and now that minimum is changing to every three years.
To give you an example, my property’s FMV recently jumped from $145,000 to $275,000. That new value was determined by GMASS, a company contracted by the Grady County Assessor’s Office to provide property valuations across Georgia. Even though I paid more for my house than its current FMV, this sudden increase is still tough to budget for. If property values had been adjusted incrementally over the past 17 years, the increase would have been more manageable—about $7,600 in value per year. That would mean paying taxes on an additional $3,000 annually. At the current school millage rate of 13.4, that’s only a $40 tax increase each year—much easier to handle than the additional $700 my wife and I now need to pay, and we don’t even have kids in school!
Why We Can’t Just Roll Back the Tax Rates
The solution may sound simple: just roll back the tax rates for the schools, county, and city, so that the increase in property value doesn’t impact taxes. But it’s not that easy. Georgia law requires school systems to demonstrate their commitment to funding education by levying an “effective” tax rate of at least 14 mills to receive equalization dollars from the state.
This year, Grady County earned $5,855,243 in equalization funds, which is intended to help close the wealth gap between school systems. Due to the undervaluation of properties, however, Grady County is only collecting taxes on 27% of the property value instead of the required 40%. As a result, our effective millage rate has dropped to 13.2 mills, which means we’re no longer meeting the threshold.
Conclusion: A Property Value Issue, not a Tax Issue
Last year, our local tax revenue was around $7.5 million, and we cannot afford to lose the $5.85 million we receive in equalization funds. Before considering any rollback of the tax digest, we must ensure that we meet our approved budget and maintain the required 14 effective mills. Our school system leaders have always been committed to keeping tax rates as low as possible, especially to protect those on limited incomes from being taxed out of their homes. We will continue to prioritize that. However, as mentioned earlier, this isn’t a tax rate issue—it’s a property value issue.