Georgia: Perdue gives in on homeowner tax grants

Georgia Gov. Sonny Perdue on Tuesday signed legislation funding homeowner tax relief grants worth about $250 a household, even as he continued to deride them as ineffective.

The $787 billion federal stimulus package — which many Georgia Republicans have criticized as bloated — protected the state from even deeper cuts and helped fund the tax relief grants.

Local officials liked the news.

“This lets me breath easier,” said Walker County Tax Commissioner Carolyn Walker. “I was concerned, because it was really going to hurt a huge number of households in the county.”

She had said it would be up to the commissioner and the school board, but it was likely new tax bills would have had to be issued.

Without the grants, the Walker County School Board would have been about $2 million short in the current budget year, and the county government about $500,000 short, the tax commissioner said.

“This relief will mean the schools will be able to continue operations,” Mrs. Walker said. “I can’t imagine them having to do without $2 million.”

It was either do without or issue new tax bills for property owners in the county, though, if the grants had not been approved.

Budgets had already been adopted figuring in the grant revenue. School boards and county and city governments across the state had been struggling with the funding quandary.

Local government lobbyists said property taxes would almost certainly rise down the road, since the legislation does not guarantee the grants in the future.

The legislation agrees to funnel $428 million to the tax relief grants for the current fiscal year but ties the grants in future years to the state’s economy. The state’s dismal economic outlook is unlikely to improve anytime soon.

“It means everyone’s tax bill will go up,” said Jerry Griffin, executive director of the Association County Commissioners of Georgia.

LaFayette Republican Rep. Jay Neal dismissed the argument that the funding formula in HB 143 will end the grant after this year and not restore funding until state revenues produce a surplus.

But predicting which way the economy will swing has been impossible, so it’s anyone’s guess when state revenues will start to turn around, Rep. Neal said.

“Who knows where it is going to be next year,” he said.

Dade County Executive Ted Rumley said the bill will give officials time to make taxpayers understand.

“What we have been told is that if everything goes as planned, it will give us a year to explain to the citizens that this will not happen next year — brace yourselves, a tax increase is coming,” Mr. Rumley said.

HB 143 adds predictability into future tax grant by alerting tax assessors whether or not the state will be funding the grants in the coming year, Rep. Neal said.

The tax relief came as Gov. Perdue ordered another round of budget cuts for state agencies to help fill a budget deficit for this fiscal year of $2.6 billion.

“We’ve gotten down to scraping the bone,” the governor said at a news conference, flanked by Lt. Gov. Casey Cagle and House Speaker Glenn Richardson.

Gov. Perdue originally called for eliminating funding for the property tax grants to help close the state’s budget deficit, panicking local officials who had already mailed out tax bills.

He continued to be critical of the grants, but was willing to compromise Tuesday.

“I feel that it’s appropriate for a chief executive, even when he disagrees with legislative action, to bow to that will if it’s in the best interest of the state and that’s what I’ve done,” he said.

State Republican leaders had pledged to restore the tax relief this year, and the governor said Tuesday that federal cash couldn’t have come at a better time

“It has enabled us to have a balanced budget for 2009,” he said.

The state is counting on an additional $465 million in Medicaid funding from the bill, which President Barack Obama signed into law on Tuesday. That frees up state money to be used for other things in the budget, including the tax relief. Ultimately, the state is expected to see billions of dollars in federal stimulus for health care, schools and road projects.

To fund the tax credit, though, Gov. Perdue is calling for another 1 percent cut to all state agencies, which will cut another $131 million from the spending plan. The cuts would include $98.7 million for the state Department of Education and $20.4 million for the Board of Regents.

Among the other solutions he uses to balance the books is moving an additional $150 million from the state’s rainy day fund and slashing $6 million in local assistance grants for projects around the state.

Staff Writer Mike O’Neal, Correspondent Jake Armstrong and Associated Press Writer Shannon McCaffrey contributed to this report.