Freeze or Thaw? Breaking Down Columbus's "Tax Freeze" Fight
Columbus is divided. From the historic mansions in downtown Columbus to the red brick suburbs of Oakland Park, homeowners’ yards are sprouting signs asking you to either “Keep the Freeze” or “Thaw the Freeze.”
But what is the Freeze, and why is it suddenly such a big deal? The answer is important (yes, even to students), because the outcome of this year’s vote on whether it stays or goes could determine the future of Columbus.
First, we have to get some background information out of the way. All homeowners in Columbus pay a mandatory yearly tax on the value of their homes. The city calculates this tax using the following equation.
Property tax = millage rate • (assessment rate • FMV – exemptions)
A millage rate is the amount per $1,000 used to determine taxes on a property, and those rates fluctuate based on how much money the city needs. For example, if the city applies a millage rate of 10.00, the taxpayer will pay $10 on every $1,000 of property that he owns.
The assessment rate is the amount of property value that is taxable by the city. Columbus’ assessment rate is 40 percent, and so for a house worth exactly $100,000, the city is allowed to collect taxes on 40 percent of $100,000. The fair market value (FMV) is just that– the current value of the property. Finally, the homestead exemption is a tax break provided to homeowners by the city.
Columbus has control over two parts of this equation– the millage rate and the homestead exemption. The State of Georgia controls the assessment rate and independent agents assess the fair market value.
Today, property assessors are heavily regulated, but it wasn’t always this way. Aggressive property appraisers rapidly boosted the value of properties throughout the 1960s, which caused homeowners to pay more and more in taxes, year after year.
Homeowners felt cheated, so they passed the Freeze as a defense against future tax spikes. The Freeze permanently fixes a homeowner’s annual property tax rate at the time of purchase. Once you buy a house, you pay the same amount of property tax on it each year, regardless of how much your house grows or lessens in value. It remains in place today.
This election, Columbus residents will vote on whether to keep the Freeze or “thaw” it. Thawing it would allow those who have the Freeze to keep it until they move to another house. After that, the property would be on a free market system. New citizens would forego the Freeze entirely.
Mayor Teresa Tomlinson, a strong supporter of the Thaw, explains the Freeze this way: “You can buy a house exactly like your neighbors. Same size, same footprint, but your property taxes can be thousands more simply because you bought your house at a later date. Currently, we have homeowners paying $400 on $800,000 homes. People see these inequities and are discouraged from buying property, and discouraged from moving to Columbus in general.”
Mayor Tomlinson says that this is the reason Columbus’s population growth has been stagnant since the 1970s. Without new people bringing jobs, businesses, and families to Columbus, it will be difficult for the city to grow and evolve. Whether that stagnation is due to the Freeze is not 100 percent clear, but the U.S. Census Bureau estimates that between 1970 and 2012, the city’s population grew by about 25,000. That number pales in comparison with similarly sized cities like Athens, Huntsville, Rome and Augusta, which all saw population increases of more than 25 percent in the last 40 years. Some of those cities don’t even have an interstate. None of them have a property tax freeze.
Dr. Benjamin F. Blair, associate professor of economics and director of CSU’s Butler Center for Business and Economic Research, studied the economic effects that the Freeze has had on Columbus over the last several decades. Dr. Blair discovered that the cumulative loss of purchasing power over just the last 10 years was equivalent to skipping an entire year of tax revenue.
“The city uses the homeowners tax dollars to purchase goods and services, like gasoline for city ambulances, or milk for public school lunches,” Dr. Blair explained. “If the city can’t get the money for those services, it must either cut them or add additional tax revenue elsewhere.”
Dr. Blair cited several examples in his study. “Gas, for example, in 1998 cost about a dollar. If your annual tax rate in 1998 was $500, your purchasing power was about 500 gallons,” he said. “Today, because of inflation, gas costs about 2 dollars, but that homeowner is still paying $500 under the Freeze. That $500 only buys the city about 250 gallons, therefore diminishing the purchasing power of the tax revenues.” Mayor Tomlinson said that those compensatory funds are coming out of new homeowner’s pockets in the form of a premium.
A premium is an additional amount added on to the standard price. In Columbus, when a person buys a home, they must pay a 16 percent premium added onto their annual property tax for the first 14 years. For example, if a person’s property tax is $1,000, they must pay the city $1,160 dollars for 14 years. Then the premium is lifted, and the tax rate goes down to $1,000. “75 percent of homeowners in Columbus are subsidizing the remaining 25 percent,” said Mayor Tomlinson. “Your 16 percent premium is bailing out people who aren’t paying taxes.” The Mayor says that students face a big hit as well, because apartment complexes must keep rents artificially high to compensate for people paying low taxes under the Freeze.
The advocacy group Citizens to Keep the Freeze says that any attempt to remove the Freeze is merely a cash grab from a greedy city government that cannot budget properly. “Instead of bemoaning the supposed negative effects of the Freeze, we should be promoting to every prospective homeowner the benefits of protection from increased taxation and one of the highest homestead exemptions in the state,” says a statement on their website. “The new homeowner who has stretched his budget to the limit to afford a home has the protection and peace of mind of knowing that his tax assessment will not be raised as long as he occupies the home.”
Mary Sue Polleys, a political advocate for Keep the Freeze and longstanding Columbus resident, says that the constitutionality of the Freeze implies its fairness. “The U.S. Supreme Court upheld [the Freeze] as constitutional in 1992 and again in 2003…because, it treats every single home buyer the same,” Polleys said. Polleys, along with many other supporters, believes that if the Freeze is thawed it will create two groups of taxpayers.
Freeze supporters argue that the courts would rule a dual-tax system unconstitutional, and consequently take away the benefits of the Freeze for everybody in favor of the new free-market system. They believe that if this happened, it would put the livelihoods of hundreds of people living on fixed-incomes in jeopardy.
Mayor Tomlinson, along with the Columbus Chamber of Commerce and City Councilor Walker Garett, say that there is no danger of the Thaw being challenged in court.
Voters will have the opportunity to decide for themselves in November. Until then, concerned citizens may find more information at www.thawthefreeze.com and www.keepthefreeze.com.
