Jim Pehrson, the county’s finance director, said the projected jump in tax revenue reflects growth in the county’s real estate market.
He said the general fund millage rate — the multiplier used to calculate the amount of one’s property tax that will go toward the county general fund — will be lowered from 7.52 mills to 7.32 mills, pending approval by the Board of Commissioners July 22.
The millage rate reduction means some property owners could see a smaller tax bill, Pehrson said.
But higher property value assessments across Cobb could end up costing many owners more.
Stephen White, the county’s chief appraiser, said the recovery of residential real estate played the biggest part in inflating the county’s tax digest — the total assessed value of all county properties — from $24.7 billion in 2013 to $25.6 billion in 2014, according to Pehrson.
“The residential market is up because properties are selling for more,” White said. “As we pull out of the Great Recession, I think the bulk (of the recovery) is because we have fewer bank-owned properties.”
White said fewer properties on the market today are being sold by banks as the result of foreclosure, creating greater competition between sellers.
“Now, when a property owner is looking to sell their property, they’re not competing with a bank anymore,” he said. “They are competing with property owners who are selling their homes on the open market. They’re competing with their neighbors.”
White said new construction is another major reason the tax digest showed an increase this year.
The total number of taxable residential properties in the digest jumped by 783 this year — from 229,972 in 2013 to 230,755 — though White noted construction only added one taxable commercial property inside county lines, bringing that total to 13,280.
Commercial properties grow when more shops are filled with tenants, White said, because a fuller property creates more income in the form of rent payments.
Pehrson said the owner of a house valued at $200,000 would see a property tax saving of $14 on his bill this year if his home’s value remained unchanged between 2013 and 2014.
However, he said, if similar houses around the $200,000 home are selling for more, the value of the home will go up due to the market, and the property owner would ultimately owe more property taxes, even though the millage rate is falling.
Pehrson said the millage rate change must be advertised because, although it will be lower than last year’s, the proposed rate will result in a revenue increase. That means the county is required by state law to hold a series of public hearings.
State law requires the county to calculate the millage rate each year after all property values are assessed based on the conditions of the current market so tax revenues will stay the same as they would have if no reassessment had occurred at all, Pehrson said.
In other words, the state’s regulations are written so the county’s tax revenues can’t change unchecked from year to year because the millage rate is raised or lowered to account for the real estate market fluctuations that cause the value of a given property to change each year.
The adjusted rate is called the rollback millage rate, Pehrson said.
The county adopted the 2014 budget — which runs from Oct. 1, 2013, to Sept. 30 of this year — using the proposed rate of 7.32 mils as a projection, he said.
When calculations based on official property assessments showed the county would need a lower rollback millage rate — 7.21 — to collect the same amount of revenue as it did last year, Pehrson said officials opted to keep the higher 7.32 millage rate in place.
Commissioner Bob Ott, who represents southeast Cobb, said part of the chairman’s role is to propose a millage rate for the district commissioners to consider.
“The proposal being brought forward before the board does not roll the millage rate all the way back to the rate of 7.21,” he said.
Ott said the board is required to hold hearings any time the county will net a revenue increase from adjusting the millage rate.
Ott said he had a “concern” about raising taxes, but added he plans on discussing his reservations with Chairman Tim Lee privately before he speaks about them publicly.
Keeping the new millage rate higher than the rollback rate will account for the $1.5 million in extra tax revenue this year, Pehrson said.
“Keep in mind that, if we are going to have 780-plus new residential properties, we have to service those properties,” Pehrson said.
He said the expansion could mean wider areas for police to protect and a need for more libraries, among other things.
“The decision has been made to proceed with what we planned on at the start of the fiscal year,” Pehrson said. “An increase or decrease in the millage rate does not necessarily mean an increase or decrease in tax revenues,” he said, adding a shrinking digest resulted in lower tax revenues for “two or three” of the past five years.
During those years, Pehrson said, the board should have raised the millage rate to keep revenues constant, but the county decided instead to accept less in taxes.
Robert Quigley, spokesman for the county government, said the proposed millage rate hike will require the Board of Commissioners to hold three public hearings to “allow the public an opportunity to express their opinions on the increase.”
Quigley said the three hearings will take place in the board’s meeting room off the Marietta Square.
He said commissioners will vote on the millage rate following the final public hearing at its July 22 meeting.