Property Tax and Appraisal Issues in Georgia

Property Tax and Appraisal Issues in Georgia David H. Newmannewman@warnell.uga.edu Center for Forest Business Warnell School of Forestry & Natural Resources The University of Georgia Atlanta, GA – February 2, 2007

Discussion outline • Property taxation and growth • Relative impacts of current taxation • Impact of CUVA and Preferential Agricultural Assessment • What this all means

Recent population growth in Georgia

Sources of property tax revenue in Georgia in 2005 Total taxes = $8.854 billion $13.1 mm $47.1 mm $200.6 mm $15.2 mm Source: DOR, Summary of Ad Valorem Taxes Levied in Georgia Counties in 2005

Changes in industrial timberland tax/acre in Georgia from 1999 to 2003 Source: Company supplied data

Change in FMV/Acre for 5 companies in GA between 1999 and 2002(value = % change from 1999-2002) 48.0% 16.3% 39.7% 32.4% 31.0% 21.7% Source: Collected company data

Average timberland tax/acre found across the country in 2003 West South Northeast Midwest Source: Tammy Cushing

Percentage reduction in LEV from state taxes across the South Source: Tammy Cushing

Percentage reduction in LEV from all taxes based on ownership type Source: Tammy Cushing

Some simple mathematics on timberland returns • Assume an LEV of $682/acre (@ 5%) for timberland in GA which falls to $546 after federal income taxes • The annualized net return/acre is $27 • Using 2003 data, Georgia’s property and timber taxes take $98 off the top ($4.90/acre), reducing the after federal tax land value by 18% • Inclusion of state income taxes reduces the value by 26.7% • As taxes rise, it is harder for timber to compete with other land uses • Impact will be felt strongest on those lands in which meaningful alternatives exist

Your House as Seen by . . . Your Lender Yourself Your Buyer Your Appraiser Your Tax Assessor

The impact of assessments • Wide variability in assessments by region with increasing total values over time • Piedmont and Mountain regions especially hard hit with increasing change in the Coastal Plain • Property taxes have risen 6.8%/year since 1996 Assessed values rising 8.0%/year since 1995 Source: GA DOR-PTD

CUVA covenants and acreage timeline 88.2 84.8 77.4 77.4 Source: DOR Annual Reports and Consolidation Sheets

Preferential Agricultural Assessment covenants and acreage timeline 153 152 157 160 Source: DOR Annual Reports and Consolidation Sheets

Distribution of CUVA covenants across Georgia in 2005 111,371 Covenants 9,825,308 Acres

Number of Preferential Agricultural Assessment Covenants in 2005 12,713 Covenants 2,037,303 Acres

Percentage of rural land enrolled in CUVA or PAA Programs in 2005

Combined CUVA and PAA acres in Georgia counties in 2005 # of Acres 124,084 Covenants 11,862,611 Acres

Possible Policy Ideas • Acknowledge that Georgia’s tax policies are affecting the competitiveness of the state’s land use sector • Expand CUVA and PAA to corporate entities and remove the 2,000 acre cap • Focus on the appropriate assessment of rural lands that acknowledges current use

Property Tax and Appraisal Issues in Georgia