When Johns Creek City Manager Warren Hutmacher saw the numbers on the city’s tax digest Friday, something didn’t look right.
An additional $76.2 million in property tax exemptions — tax breaks given to those who use their houses as their primary homes, to disabled veterans and to others — seemed too high. So the city called Fulton County to point out the anomaly.
The catch prevented a potential unnecessary and unintended tax increase for residents across the county.
It turns out that the exemption calculation was incorrect for all Fulton city and county governments. The formula that was used to get the number for exemptions was wrong, said David Fitzgibbon, chief appraiser for the Fulton County Board of Assessors.
“It wasn’t something we could have picked up unless we were aware that a different answer was expected,” Fitzgibbon said. “This is such a strange problem.”
Fulton County’s tax digest is calculated by a third party. Fitzgibbon said that company, Tyler Technologies, is working to rewrite the formula and fix the error. Fitzgibbon said he hopes it will be solved this week.
The mistake shouldn’t have any bearing on property assessments, which went out Friday. Where it did have the potential to have an effect was in the millage rates in the county and its cities.
Georgia law requires governments to decrease the millage rate as values rise, or to advertise that they are increasing taxes if values rise and the millage rate stays the same. With an increase in tax exemptions that were on the books but were not real, cities could have inadvertently taxed residents more than they needed to by failing to roll back the rate.
Now, Fitzgibbon said, tax rates will be correct but the process will be delayed for a few days as the county makes sure that everything is done properly.
The issue became a point of contention with Fulton County commissioners Wednesday. While a vote to determine the county’s millage rate was on the agenda, Chief Financial Officer Sharon Whitmore said she did not yet know whether the county would be able to keep its millage rate at 10.5 mills, or would need to reduce it to avoid a backdoor tax increase. Commissioners can choose to reduce the rate even more, but were expected to decide on a ceiling.
Not knowing the true value of exemptions at the county level is “less than optimal,” Commissioner Bob Ellis said.
Without knowing what the final number would be, commissioners declined to create a ceiling for the millage rate. If commissioners don’t make a decision soon tax bills and payments could be delayed.
Since the 2016 collections are used to pay off the money that has already been spent this year, a delay in tax collections could mean the county dips into its reserves or has to borrow to cover the bills.
“The real issue is when we will be able to get the process moving forward,” Whitmore said. “It’s problematic. How big of a problem may be yet to be seen.”