Georgia Tax: Tax breaks for seniors - Can counties afford them?
by Janel Davis, 02 June 2022 -- As county leaders struggle to close larger budget gaps with less available money, complaints are increasing that tax exemptions once considered good local policy should now be reconsidered.
In Cobb County, where the school system faces a $126.7 million deficit, there have been rumblings of re-evaluating the county's lenient school tax exemption, which provides a full exemption for all homeowners age 62 and above and costs the county more than $50 million a year.
With such a high deficit, some in the county have begun to wonder whether this exemption, originally intended as a property tax break for older residents with declining incomes, has become unsustainable in a post-recession time of sagging tax revenues.
Cobb resident Leslie Ann Dunn blames the senior exemption for a large part of the school system's shortfall, which was the largest budget gap faced by school districts in the metro area.
Fulton County schools' $117 million gap was the next highest. Fulton's school exemption includes a minimum age limit of 65 and an annual income restriction of $30,000.
"I'm just looking for equity and fairness and this exemption is not fair," said Dunn, who has lived in Cobb for nine years and has two children in county schools. "The spirit of the law is to provide a retirement benefit for those on limited income without kids in the school system."
But times have changed, said Dunn, as more people are working beyond age 62, living in high-valued homes and having kids later.
"All I say is [Cobb] needs parity with other counties," she said.
In addition to the statewide homestead exemption, counties offer their own property tax exemptions, including county school tax breaks. But the school exemptions in seven other metro Atlanta counties include higher age limits and/or income restrictions.
In Cobb, 39,171 homeowners receive the school senior exemption (excluding 5,973 Marietta homeowners who pay city school taxes instead of county school taxes), according to information obtained from the county tax commissioner.
The senior exemption accounts for about two-thirds (65.7 percent) of a homeowner's total property tax bill and equates to a full 100 percent exemption for the school tax portion. On a house valued at $150,000, a homeowner receiving the senior school tax exemption saves $945 on the tax bill.
The county school senior exemption amounts to $55.5 million in taxes not collected from Cobb homeowners receiving the senior exemption.
In Cobb, the state's second largest school district, more than 700 positions, including 579 teachers, were cut to fill $57.9 million of its budget gap.
Some Cobb residents eligible to receive the senior exemption say they could do without it, at least right now.
"I think 62 is too young," said Beverly McMurray, 67, a self-employed computer programmer.
In her opinion, 70 would be a more reasonable age to set the exemption. Some fellow members of the county's Democratic Party believe they should be able to voluntarily pay the schools portion of their property tax bill, she said.
"I think there are ways to [re-structure the exemption] to keep more money coming in," McMurray said.
Changes to -- or elimination of -- the local tax exemptions would require a referendum by county voters.
"This is a great benefit to seniors and the senior population is increasing," said Woody Thompson, Cobb county commission vice-chairman. Before any changes are made, county leaders would have to take a "hard look" at the options, he said.
Cobb's senior exemption was implemented in 1973 and initially included a $6,000 income limit. County voters by referendum removed the income limit in 1979.
Since then the senior population has increased and demographics for the age group have drastically changed.
About 8.5 percent of Cobb's population is made up of people age 65 and older, according to 2008 census figures. Seniors comprised 11.8 percent of Fayette County's population, the most among metro Atlanta counties, compared with 6.4 percent in Gwinnett County, which had the least number of seniors.
By 2030, one in five residents in the metro area will be over the age of 60, according to the Aging Services Division of the Atlanta Regional Commission.
The number of seniors with bachelor's degrees increased 14 percent from 1965 to 2007, according to 2008 Federal Interagency Forum on Aging-Related Statistics report. Income levels among the age group rose between 1974 and 2006 while the proportion with incomes below the poverty line dropped from 15 to 9 percent.
But the burden of paying for housing increased 8 percent for seniors from 1985 to 2005, according to the same report.
"I don't know where people think that money from seniors will come from," said Verona Martin, 75, who has lived in Cobb County since 1994. "It becomes disrespectful. If you reach this stage in your life, I guess you expect to be treated more respectfully and be appreciated for your worth."
Martin, a retired computer analyst, moved to Georgia years ago from New York. At the height of her property tax expenses in New York, Martin paid about $4,300 annually. After relocating to Clayton County, Martin's annual tax bill was $1,600. Now in Cobb, her property tax fees are about $600 each year.
"I know people will see that and say, 'What are you complaining about?' But the ratio of taxes to income is where the impact is," says Martin, who lives on a fixed income from a work pension and Social Security benefits.
Gary Trott, 60, lives on Martin's street. Still required to pay the school tax, he is looking forward to 62.
"Although the taxes are reasonable in Cobb, any break we can get is greatly appreciated," he said. "I would hope they keep it going, but would understand if they couldn't."
County school board member Alison Bartlett would be willing to discuss a possible re-evaluation of the exemption after the board passes the school budget June 9.
"At the same time, I want to be careful that we don't shoot ourselves in the foot," she said.
And any push to wholly eliminate the exemption in Cobb is dead on arrival, said school board member David Banks, who has instead lobbied for a county-levied 1-cent sales tax benefiting the school system's general fund.
"The voting population that the exemption applies to outnumbers those it doesn't. The numbers are not in your favor for that and lawmakers know it," Banks said. "Let's not focus on something we can't change. Let's look at something we can."
There is an appetite for re-evaluating tax exemptions throughout the metro area and not just those pertaining to seniors. But partisanship prevents it from happening, said Barbara Payne, executive director of the Fulton/DeKalb Taxpayers Foundation.
As for changing senior school exemptions, "I personally don't feel that we should be burdening [seniors] at this point in their lives for additional taxes on schools," said Payne.
More than half the members of Payne's organization are seniors and one of their main complaints is still having to pay school taxes, she said.
If only senior exemptions are being evaluated, lawmakers must take into account the financial hardships seniors face, said Rep. Mike Glanton, Clayton County's state delegation chairman. "Overall there is a discussion that needs to be held on the local and state level. In feast times exemptions are good, but in famine time everything is open to consideration."
Although there has been no official push by local lawmakers to change the tax rules, newly passed state laws requiring evaluation of the tax system will likely impact decisions on local tax breaks, said Rep. Larry O'Neal (R-Warner Robins), chairman of the House Ways and Means Committee.
During the just-concluded legislative sessions, lawmakers passed a bill requiring an annual report from the state auditor's office listing all state tax breaks and their cost to the state. A separate new bill calls for the formation of a special council to study tax reform.
"This recession we're going through has obviously brought attention to this issue. There is no fluff left. We're forced to re-evaluate the entirety of the tax code," O'Neal said. "What happens at the local level, if you exempt a certain population from the burden of tax, you add more of a burden to the remaining population, unless you're willing to reduce your taxes in total."