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EHOST/SPLOST and Assessment Freeze Referenda Placed on November 7th Ballot

10/19/17 7:47 am

10/19/17 7:47 am

On September 26, The DeKalb Board of Commissioners joined twelve DeKalb Cities to place two referenda on the November 7 Election Ballot.  A third referendum on a change in the County Services Tax Assessment Freeze was placed on the ballot by act of the Legislature.  The first referendum will determine if the Homestead Option Sales Tax (HOST) is amended to devote 100% of the penny sales tax to homeowner tax rebates, and erasing the differential between municipal and unincorporated rebates.  The second referendum will determine if an additional 1% Special Purpose Local Option Sales Tax (SPLOST) will be collected in DeKalb for the next six years to fund capital investment in transportation, public safety and capital repairs.  Both referenda must gain voter approval for either to take effect, if one fails, both fail.  The third referendum would make the existing Assessment Freeze coincident with the SPLOST, for as long as the SPLOST is in effect.  Read on to understand some of the complexities of the referenda, and how they would affect DeKalb residents.

Equalization HOST
First, let’s look at the HOST amendment, called the “Equalization Host” or E-Host.  DeKalb is one of two counties in Georgia that has such a tax, which offsets or rebates property taxes on owner occupied residences.  The current structure only provides home-owner tax relief on the portion of the bill levied by the County government.  It directs the difference in the rebate that would go to city homeowners (if they were not in a city) to city governments, based on the value of owner occupied homes within the city.  These funds were unevenly distributed, with those cities having a lot of high priced, owner occupied homes receiving many times more than those cities with higher shares of rental property and/or lower home prices.

The new E-HOST would offset an equal portion of every homeowner’s tax bill, regardless of municipal status.  Under current parameters, both municipal and unincorporated homeowners would see an increase in their rebate.  The overall impact of the rebate is a function of owner occupied property values, the millage rate, and sales tax collections, and can fluctuate in the future.  Currently, the net effect is financially beneficial for municipal homeowners, but less so for unincorporated homeowners, since they were already receiving a rebate against their entire local government tax bill.  It does not correct the intrinsic regressive nature of the HOST, because as before, only homeowners receive the rebate and the more expensive the home, the bigger the rebate.

The E-Host will only take effect if voters agree to impose an additional one cent sales tax for the next six years.  The two issues are linked because, since 2007, municipal governments with high value homesteads have become reliant on the redistribution of HOST funds from the County to them to offset the unequal rebate awarded their homeowners.  With the E-HOST now providing an equal rebate, no funding is left to redistribute to the richer cities.

The DeKalb SPLOST
The DeKalb SPLOST (DSPLOST) is unlike the SPLOST used in Gwinnett, Cobb, or any other Georgia County (the Statewide SPLOST), because it was created by DeKalb legislators to meet their priorities.  DeKalb is not eligible for a Statewide SPLOST, because the state specifies a cap of 2% on locally imposed SPLOST.  DeKalb reaches that ceiling because of the MARTA sales tax and the HOST.  Instead of exempting one or both of those pennies from the cap (since they fund tax relief and critical infrastructure), our legislative delegation created something new.

The Statewide SPLOST is broadly applicable to a wide range of capital improvements, including new buildings.  It also has provisions for mandatory cost sharing for County-wide investments in shared infrastructure that are the County’s financial responsibility, like the courts.  The DSPLOST has no mechanism for shared funding, except by unanimously approved intergovernmental agreement, and the DSPLOST is restricted to transportation, public safety, and a maximum of 15% for maintenance of existing public facilities.  The DSPLOST is strictly allocated on a per-capita basis between the municipalities for their jurisdictions, and the County Government for residents of the unincorporated areas.  About 39% of DeKalb (excluding Atlanta, which is excluded from the DHOST) now resides in cities.  The County and the cities did unanimously adopt an intergovernmental agreement to extend the tax from a five to a six year term, and to use 2016 population figures, rather than the 2010 Census figures that are the legislative default.  However, the cities rejected a unanimous agreement to share the cost of countywide improvements for fire and facility maintenance.  Importantly, the DSPLOST exempts food and medicine from the sales tax.

The Project List
You can review the project lists approved by municipalities and the County by following this link.  The lists show that some governments were very general and others more specific in their selections.  The County’s list was created by the CEO’s administration after a series of meetings by the Board of Commissioners that generated no specific direction to the Administration.  I proposed a policy framework that was not acted upon, and a substitute project list that reflected those policy priorities, but my substitute failed in a 4-3 vote.  The focus of my alternative was to prevent the unincorporated taxpayer from alone bearing the full cost of county wide fire and capital maintenance projects, and to provide more funds for road paving and district-focused projects in transportation and facility maintenance.  I was concerned that, by not sharing countywide burdens between all stakeholders, we risk making decisions based on where the project is rather than where it’s needed.  Thus fire system improvements in cities that don’t contribute to their cost may be de-prioritized, in favor of projects in the unincorporated areas from which funding is derived.  This puts our common interest at risk unnecessarily, as there are other Countywide funding mechanisms available for countywide purposes.

Finally, the third referendum was placed on the ballot by the General Assembly, not the County Commission.  If approved, the existing Assessment Freeze for County levied taxes would run concurrent to the SPLOST.  If it does not pass, the existing Assessment Freeze would sunset in 2020, as currently provided by law.  At that time, the Assessment Freeze would be subject to renewal as has occurred twice previously.

The E-HOST/DSPLOST referenda represent a complicated and idiosyncratic approach to the imperative for more infrastructure funding in DeKalb County.  The third referendum would tweak the existing assessment freeze.  Since the referenda will be conducted during a municipal election year, it will likely turn on the votes of those who turn out to also choose their city officials rather than the unincorporated voter, who will see only these three questions on their ballot.

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(Commissioner Jeff Rader represents District Two on DeKalb County's Board of Commissioners. He was reelected in November of 2010 for another four-year term.)

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