City Attorney Jimmy Skipper explains house bill 581
Published 3:15 pm Monday, January 27, 2025
- City Attorney Jimmy Skipper explains house bill 581.
City Attorney Jimmy Skipper gave details on House Bill 581 during the January 16 Americus City Council meeting. The legislature adopted last year, with the bill getting signed into law contingent on the adoption of a constitutional amendment during the November election, which passed.
Skipper also gave background on the purpose of House Bill 581. “It appears that it’s written for places where the property, residential property, other property, is increasing in value at a pretty rapid rate every year.” Skipper noted areas like Atlanta, where property taxes were skyrocketing. “That apparently is a big issue in the metropolitan areas of the State, you know, where they got fast growth.” However, Skipper noted this was not an issue in Sumter.
Skipper stated his purpose in detailing the Bill to the City Council. “My job is not to tell you what you should do, [but] what the consequences are.” He explained the measure. “You get a reduction or an exemption from your property taxes.” He stated the exemption was set at $2,000 each tax year.
Skipper outlined the taxation process for property. “They do a fair market value analysis and they do an assessed value analysis, which is a percentage of the fair market value, and that’s what they pay taxes on.” He gave the change under House Bill 581. “What this does is it says that the value of your home, your residence, if you are under House Bill 581, is essentially frozen at the value it was in 2024.” Even if the fair market value increased, it wouldn’t affect the taxation of the property.
However, Skipper stated tax can still vary from year to year under the Bill. “It creates a floating homestead exemption. As I told you, the homestead exemption is $2,000. Floating homestead exemption means it varies every year.” Skipper stated that the tax could increase based on inflation rate, or CPI. “Whenever the CPI goes up, that’s how much your taxes go up. A simple example would be, if you home is valued at $100,000, and they said the inflation rate was 3%, then the value that you would be taxed on is $103,000.”
Skipper noted a couple other things could cause property tax on a homestead to change under the Bill. “The only time that could change would be two situations. One, if you sold the house to somebody else. . . their value would be essentially the value they bought it for.” The homestead would then be assessed based on a percentage of the new fair market value, with adjustments allowed for inflation. Skipper summarized its effect on a home’s taxes. “It’s frozen plus inflation every year.” He stated House Bill 581 only applied to homestead residences.
However, construction can break the freeze. “The second time it would increase, would be if you made any substantial improvements, if you added a second floor, if you put a swimming pool in, whatever increases the value. They would reevaluate it based on those improvements, much like they do now.”
Skipper stated that the Bill’s timing could cause issues if the City chose to opt in. “The second thing that we’ve looked at is, you’ll recall that under State law, the county tax assessor has to present a digest, tax digest to the department of revenue every year.”
Skipper stated that if the digest was not between 38-42% of what the State says the fair market value should be, the County gets fined. last year, Sumter was beneath the threshold. “The State did impose a fine because that value is only 32%.”
Skipper cited another issue. “In the real world, there’s really not ever a tax cut. There’s tax shifts, but most of the time there’s not tax cuts.” For the County to maintain the same amount of revenue, other properties would have to be taxed at a higher rate.
While the measure had passed, the City stilled had options. Cities, Counties, and School Boards were all given the ability to opt out. Skipper outlined the opt out process. “If the local governments want to opt in, they do nothing between now and March the 1rst. Our window to do something is January 1 up until March the 1rst.”
Skipper stated that the opt out process was lengthy. “The opt out process is what we’re looking at now, and it is exceedingly complicated.” The deadline is narrow. Skipper clarified that it was not a vote to opt out, but to announce intent to opt out. The Americus City Council voted unanimously to announce an intent to opt out. The County and School Board have already announced an intent to opt out.