property tax and appraisal issues in georgia
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Property Tax and Appraisal Issues in Georgia. David H. Newman [email protected] 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 - PowerPoint PPT PresentationTRANSCRIPT
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Property Tax and Appraisal Issues in Georgia David H. Newman [email protected]
Center for Forest BusinessWarnell School of Forestry & Natural Resources
The University of Georgia
Atlanta, GA – February 2, 2007
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Discussion outline
Property taxation and growth Relative impacts of current
taxation Impact of CUVA and Preferential
Agricultural Assessment What this all means
3
Recent population growth in Georgia
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Motor Vehicle, 7.4%
Industrial, 6.4%
Utility, 3.9%
Additional, 0.5%
Other, 3.1%
CUVA, 0.5%
Commercial, 25.6%Ag Pref, 0.1%
Ag, 2.3%
Timber, 0.2%
Residential, 53.0%
Total taxes = $8.854 billion
Sources of property tax revenue in Georgia in 2005
Source: DOR, Summary of Ad Valorem Taxes Levied in Georgia Counties in 2005
$200.6 mm
$13.1 mm
$47.1 mm
$15.2 mm
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Changes in industrial timberland tax/acre in Georgia from 1999 to 2003
Source: Company supplied data
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Change in FMV/Acre for 5 companies in GA between 1999 and 2002(value = % change from 1999-2002)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Co. 1 Co. 2 Co. 3 Co. 4 Co. 5 Average
1999 2001 2002
39.7% 32.4%
16.3%
21.7%
48.0%
31.0%
Source: Collected company data
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$3.40
$1.41
$1.04
$1.81
$3.81
$4.77
$4.34
$3.08$3.43
$2.70
$2.00
$1.18
$3.39
$5.91
$5.00
$1.65 $1.60
$1.14
$2.85
$1.10
$4.12
$1.74
0
1
2
3
4
5
6
7
CA
WA ID AL
MS
GA FL SC
NC
LA VA
AR TX
NY
PA
ME
TN KY
WV
MI
MN
WI
Average timberland tax/acre found across the country in 2003
Source: Tammy Cushing
West South Northeast Midwest
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Percentage reduction in LEV from state taxes across the South
StateAfter Property
TaxAfter Severance/
Yield TaxAfter State Income Tax
Louisiana 7.8% 14.5% 23.0%
Georgia 10.5% 14.4% 21.5%
N. Carolina 9.6% 9.6% 20.3%
S. Carolina 8.6% 8.6% 17.6%
Virginia 6.0% 6.0% 14.1%
Mississippi 7.3% 8.0% 13.9%
Texas 13.6% 13.6% 13.6%
Arkansas 3.6% 3.6% 12.8%
Kentucky 6.3% 6.3% 12.8%
Florida 10.7% 10.7% 10.7%
Alabama 3.4% 3.4% 9.6%
Tennessee 4.1% 4.1% 4.1%
Source: Tammy Cushing
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Percentage reduction in LEV from all taxes based on ownership typeState Individuals Corporate Institutional
Louisiana 44.3% 74.4% 17.1%
Texas 37.9% 68.5% 18.2%
Georgia 41.4% 67.6% 19.8%
N. Carolina 41.7% 67.2% 12.8%
Arkansas 34.8% 63.7% 4.8%
Florida 31.1% 63.6% 14.3%
S. Carolina 38.8% 63.3% 11.4%
Virginia 35.4% 62.9% 8.0%
Mississippi 33.1% 57.7% 10.5%
Alabama 28.7% 55.6% 4.6%
Kentucky 30.2% 55.0% 8.4%
Tennessee 19.1% 45.1% 5.5%
Means 34.7% 62.1% 11.3%
Source: Tammy Cushing
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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
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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
Source: GA DOR-PTD
Assessment Values and Millage Rates in Georgia: 1993-2004
100
120
140
160
180
200
220
240
260
280
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Bil
lio
ns
10
12.5
15
17.5
20
22.5
25
27.5
30
Mil
lag
e R
ate
Assessment Millage
Assessed values rising 8.0%/year since 1995
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CUVA covenants and acreage timeline
0
20,000
40,000
60,000
80,000
100,000
120,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
# o
f C
ove
nan
ts
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
# o
f A
cres
CUVA-Count CUVA-Acres
Source: DOR Annual Reports and Consolidation Sheets
88.2
84.8
77.4
77.4
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Preferential Agricultural Assessment covenants and acreage timeline
0
5,000
10,000
15,000
20,000
25,000
30,000
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
# o
f C
ove
nan
ts
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
# o
f A
cres
AP-Count AP-Acres
Source: DOR Annual Reports and Consolidation Sheets
160
157
152153
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Distribution of CUVA covenants across Georgia in 2005
Number of Parcels01 - 2526 - 150151 - 500501 - 1000>1000
Interstates
111,371 Covenants9,825,308 Acres
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Number of Preferential Agricultural Assessment Covenants in 2005
Number of Parcels01 - 2526 - 150151 - 500501 - 1000>1000
Interstates
12,713 Covenants2,037,303 Acres
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Percentage of rural land enrolled in CUVA or PAA Programs in 2005
Percentage of Acres0%0% - 20%20% - 40%40% - 60%60% - 80%>80%
Interstates
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Combined CUVA and PAA acres in Georgia counties in 2005
Number of Parcels00 - 25,00025001 - 7500075,001 - 125,000125,001 - 175,000>175,000
Interstates# of Acres
124,084 Covenants11,862,611 Acres
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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