Proposed Constitutional Amendment 1: Provides for a Statewide Homestead Exemption

This Amendment gives the General Assembly the ability to legislate a state-wide homestead exemption that all localities would need to either opt out of or comply with. If passed, it kicks in HB 581, which aims to: 1) limit the impact of rising property values on the school district portion of property taxes (about 75% of total school funding) by capping valuation increases to the previous year’s rate of inflation; and 2) give the State complete control over school districts and localities to manage a vital source of income for school districts.

While some homeowners struggle with higher property taxes, this amendment’s implications are concerning. A constitutional amendment will be nearly impossible to undo. School districts fear that this measure, combined with lost funds from school vouchers, as well as pressure not to raise millage, will result in reduced school funding. 

Things to Consider When You Vote

• Forsyth County currently has some of the best performing schools in the state, but this cap—in addition to deductions from the state’s school funding due to school vouchers (the 2024 Promise Scholarship)--could lower FCS’ funding. 
• If enacted, the amendment gives power to the General Assembly over the way local governments manage a vital funding source for their public schools, the collection of property taxes.  In Forsyth County this represents 46% of funds received for operations.  
• We at The Kicker believe that handing over any element of local control of funding decisions to the GOP-dominated General Assembly is a source of concern. As Democrats, we prioritize fully funding public schools and we worry that voters have not been given adequate information to make an informed decision with this ballot initiative. ​

Deep Dive 
The state House and Senate passed House Resolution 1022 and House Bill 581 into law earlier this year, but voters must approve this constitutional amendment in November for the law to take effect. HR 1022 set up the Constitutional Amendment that was to be on the ballot, giving the General Assembly the ability to set exemptions limits for school districts for all localities within the State, provided the localities don't opt out. If the amendment is passed, HB 581, a bill that sets out the detailed process for capping exemptions, will take effect. However, amending the state constitution suggests it will be harder for voters to change this law in future, since a constitutional amendment requires a 2/3 approval of both houses.  

HB581 explained 
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This amendment caps property valuations to the prior year’s inflation rate (CPI), only for residents who remain in their homes; when the resident sells their home, the property value adjusts to current market value. This could have a chilling effect on the market, discouraging new buyers and imposing an additional burden on existing homeowners from moving (e.g., a retired couple on fixed income trying to downsize, but faced with a higher tax burden). New residents could be discouraged from entering affected counties. 

The legislation includes a provision to allow local governments to increase sales tax by 1%, but studies show that such taxes are not effective and can harm smaller counties in which residents simply make large purchases in locales with lower sales tax. 

The bill also includes a new provision to allow governments to increase sales taxes specifically to give relief to property tax payers —this despite the fact that many districts already come to voters to approve sales-tax based Special Purpose Local Option Sales Tax (SPLOST) to help fund schools. Forsyth County already deploys SPLOSTs and at the same time, offers an exemption to homeowners over the age of 65. 

Lobbyists for local governments endorse the amendment but the Association of School Districts has objected, concerned that placing a limit on property taxes--most of which goes to fund public schools—will place a strain on already underfunded public schools.  Georgia ranks 34th among states for per pupil per capita spending. Important to note is that one of chief challenges school districts have in retaining teaching staff is noncompetitive salaries. 

Despite this long-running funding gap for public schools, a sponsor of the legislation argues that the amendment will keep municipalities and school districts from creating a “back-door” funding mechanism instead of raising taxes overall to meet needs. He cited no examples. 

But school districts are restrained in how much they can raise taxes. While property values rose, so did the cost of school salaries, benefits and other expenses.  Many school districts used the increase in property tax revenue to keep pace with costs. 

Opting Out, but How?

If the amendment passes, it will go into effect on January 1, 2025. Any municipality or school district that wants to opt out of the exemption must request exemption by March 1, 2025—a mere two months later. 
During those two months, the district must provide a public notice, issue a press release and hold at least three public meetings on weekdays on the topic. Neither the legislation nor amendment details what the criteria are for an exemption. If the district does not have a full understanding of the criteria quickly enough, it will not be able to offer information to the public. School districts that do not file, or those who do and are not granted an exemption, by Mar 1, 2025 will be governed by the cap.