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Q-and-A with Jim Higdon
Jim Higdon is the executive director of the Georgia Municipal Association, the only state organization that represents municipal governments in Georgia. It is a non-profit organization that provides legislavtive advocacy, educational, employee benefit and technical consulting services to its more than 500 member governments in the state.
In a forum with the Atlanta Journal-Constitution last month, Higdon argued against artifical caps on property assessments and stressed the challenges local governments face in managing their budgets in tough economic times. His most recent op-ed follows up on those thoughts and class on the need for collaboration among all partners to weather the economic storm.
Higdon was kind enough to answer some questions for us, and his thoughts are shared here ...
1. As you noted in your column, there is a general dissatisfaction with property taxes among the state's population. What are some of the things you'd like to see done when it comes to reforming that particular area of the public revenue stream? Obviously assessments place artificial controls that can tamper with the market, but what other property tax reform ideas would you like to see pursued in 2010?
As a taxpayer, I can honestly say that I can touch and see the services I get in return for my property taxes. I can also influence how those dollars are spent in my city. The same cannot be said for state and federal taxes. Regardless of what reform efforts are pushed, the money to pay for city services will have to come from somewhere. Along with property tax reform, alternative sources of revenue must be made available to cities in order for cities to keep providing the services citizens demand.
Although capping assessments are often touted as a solution, this negatively impacts constituent services provided by local governments and schools, and limits critical public investments needed to spur and nurture private investment and job creation.
Report: “The Property Tax: Its Role and Significance in Funding State and Local Government Services”
GMA supports reasonable reform to the property assessment process. The fairest way to assess property is to perform on-site assessments annually. This would diminish most of the drastic increased property value spikes reported in fast growing areas and would accurately account for any changes within a community. But this also requires substantial manpower and a uniform approach to the assessment process across the state to accurately capture area-specific “fair market value” data.
GMA also supports amendments to the property assessment appeals process. The current system for appealing a homeowner’s property value is cumbersome and confusing. A streamlined approach to the appeals process is needed that encourages a cooperative outcome between the taxpayer and the tax assessors as well as reasonable predictability of the integrity of the tax digest for the taxing entities.
2. There seems to be a creeping encroachment on local authority in many of the recent legislative decisions made by the state legislature, regardless of the party in power or the politician pushing it. The capping of assessments, for instance, is one that directly handcuffs the ability of local communities to raise revenue and assess properties. How have these actions impacted the decision-making process at the local level?
First of all, cities are important to Georgia’s economic health. As the places where Georgians work, shop, and play, they are valuable to the state as a whole because the economic performance of the state is driven by the economic success or failure of cities. The importance of cities should never be up for debate. Just how valuable they are can be illustrated by looking at a few basic facts:
· Cities make up just under 7% of the state’s land area but are home to 41% of the state’s population.
· Cities are home to 57% of the commercial property and 46% of the industrial property in the state.
What these figures don’t tell you is that cities are also home to a significant percentage of property that is not subject to taxation, including schools, charity hospitals, and public property. In fact, according to Georgia Department of Revenue data, 55% of all tax exempt property in the state is located within cities.
City governments are governed by mayors and city council members who are serving in a government that is closest to the people. These officials live and work side-by-side with the citizens who elected them, and they have daily constituent feedback. Measures such as capping assessments, capping local spending or limiting land use powers have been based on a one-size-fits-all approach and ignore the fundamental strengths of cities – diversity, transparency and accountability.
Georgia’s state leaders have unprecedented state budget deficits to manage, which will hopefully be their focus this year instead of trying to micromanage the budgets of hundreds of local governments and school systems across the state.
As we move into another legislative session with new leadership in the House of Representatives and a gubernatorial race already in high gear, city officials have one New Year’s Resolution – to seek a meaningful and respectful partnership with state government. The next few months will give us a big hint on what we can expect over the next few years.
3. In your AJC op-ed, you talked about enacting some basic measures of tax reform and began with the $1.6 billion in uncollected taxes (from various revenue streams). Last year, the Democratic minority proposed replicating the Alabama model and localizing the collection of sales taxes to point-of-sale, as well as letting individual communities privatize that service. Is this a proposal that has some merit?
Yes, this proposal has merit. A greater pursuit of uncollected sales tax also has bipartisan support. GMA and the cities of the state are committed to working on efforts to improve the collection of sales taxes owed, whether through privatized collections, privatized auditing or improved policing of sales tax remitters by the Department of Revenue with help by counties and cities.
Local governments currently (required by state law) pay the state nearly $48 million annually to collect, monitor and remit local sales taxes but not all of this money is going to the Department of Revenue to assist with full and accurate collection and reporting of sales taxes. We believe over $1 billion a year of sales tax dollars paid by consumers is not making it to the state and subsequently to our local school systems and cities and counties because of a lack of enforcement. We think that a monitoring and data-sharing partnership with cities and counties (which know the business in their communities) will substantially increase sales tax collections without raising taxes for anyone.
4. Though this is obviously a surface assessment of the situation, it seems there are fewer and fewer controls for local governments when it comes to revenue collection. That is to say, it's always been that local governments need the 'blessing' of the state legislature to enact an increase in, say, the hotel-motel tax. Given that ideological differences and political posturing often can derail those aims, how much freedom or leeway would you be interested in seeing passed on to local communities in areas like these? Would it be more constructive for local communities to have more control in those areas, or does the current system provide the needed checks-and-balances?
Cities were created to provide a higher level of public services. Each level of government has a role to play and services to provide in the partnership. City services provide value to homeowners, businesses and visitors alike, but they aren’t provided for free. Checks-and-balances are provided by city residents who interact with their elected city leaders every day.
GMA and the city leaders that craft our policy positions are clearly on record supporting greater local revenue flexibility. A one-size-fits-all approach to revenues limits local officials’ abilities to respond to citizen requests and limits natural growth opportunities. Having greater flexibility to determine how local residents want to pay for services is in everyone’s best interest. The diversity of services provided by cities across the state reflects the ideals of the citizens in each community. And revenue options should be diverse as well.
Upwards of 80% of the state’s domestic gross product is produced in cities. State policymakers should be interested in providing as many tools as possible to help cities prosper.
