Mayors, school leaders and counties urge caution on Georgia plan to phase out homestead property tax

ATLANTA — Mayors, county managers, school superintendents and other local officials told a House Ways and Means subcommittee on Wednesday that proposals to phase out homestead property taxes (House Bill 1116 and House Resolution 1114) could destabilize local government finances unless the legislature builds stronger replacement and equalization mechanisms.

"This is a below‑the‑line decision," said Watkinsville Mayor Brian Broderick, arguing the bills would shift the state’s fiscal foundation from predictable property‑tax revenue to inherently cyclical sales tax. Broderick, whose city’s average residence pays about $460 a year in city taxes, urged the committee to require a formal economic impact analysis and stress testing before final passage.

Why it matters: The bills would gradually exempt homesteaded residential property and rely on local sales‑tax options and other mechanisms to replace lost revenue. Testimony showed the effects would vary dramatically by jurisdiction: some suburban counties could use local sales taxes to backfill the loss, while many rural and bedroom‑community governments lack the local sales base to do so.

City officials warned of immediate operational risks. "Sales tax capacity varies dramatically across Georgia," Broderick said. "When the economy contracts, sales tax declines quickly. At the same time, the demand for our services increases." Gainesville City Manager Brian Lackey told lawmakers that property taxes account for roughly 90% of his city’s public‑safety funding, and that a 3% annual cap in the bill would make it difficult to keep up with rising equipment and staffing costs.

Borrowing and credit concerns: Several witnesses said rating agencies and lenders place weight on stable, property‑tax‑based revenue when assessing municipal credit. Broderick cited a recent GEFA application that required property‑tax pledges for a $3.5 million loan; Rusty Paul, mayor of Sandy Springs, estimated the city’s revenue loss under the bill at about $19.5 million and warned that higher interest costs could follow if the tax base destabilizes.

School systems warned that replacing local property tax with sales tax would make revenues more volatile and could impair long‑term planning. "If homestead property is exempt by 2032, school operating revenue becomes strictly dependent on sales tax," Duke Bradley, Newton County superintendent, told the committee. Newton County officials said roughly 42% of the district’s revenue currently comes from local property taxes.

Equity and local control: Sandy Springs Mayor Rusty Paul and others argued the bills as drafted would give disproportionate benefits to high‑value homeowners ("If I own a $200,000 home I might get a $2,000 benefit; a $2 million home would get a $20,000 benefit") and reduce local participation in decisions about sales‑tax hosting and allocation. "Cities must have an equal seat at the table," Paul said of county‑led decisions on local sales pennies.

Proponents’ framing and next steps: Committee members and supporters emphasized that the measures are designed to be gradual — a six‑year pathway toward a full homestead exemption — and that elements of local backfill, equalization and a referendum mechanism are in discussion. A committee member said the bills would put choices to voters and create trust accounts to manage volatility. Committee members asked attending jurisdictions to submit aggregate revenue and tax‑base data (sales tax and property tax) from 2019–2024 for further analysis.

Stakeholder perspectives: The Georgia Association of Realtors (Betsy Bradfield) supported the bills as a tool for housing affordability and said thousands of Realtors will be in the Capitol supporting the measures. The Georgia School Boards Association and several local boards said they have submitted written recommendations and draft language to preserve school funding stability and urged explicit make‑whole and equalization protections.

What’s next: Committee members asked for concrete local data and said some of the concerns raised (equalization, reserve rules, penny reallocation) are already part of internal discussions. No formal votes or motions were taken at the hearing. The subcommittee adjourned after hearing county and school system testimony and requested written data from the witnesses.

Sources: Direct testimony to the House Ways and Means subcommittee; witnesses quoted include Brian Broderick (Mayor, Watkinsville), Brian Lackey (City Manager, Gainesville), Rusty Paul (Mayor, Sandy Springs), Vince Williams (Mayor, Union City), Duke Bradley (Superintendent, Newton County), Betsy Bradfield (Georgia Association of Realtors).