Mayor: End property tax freeze for new home buyers; freeze would remain for current homeowners

mowen@ledger-enquirer.comJanuary 22, 2013 

Mayor Teresa Tomlinson presented a three-pronged approach for Columbus’ future Tuesday, one of which would place a sunset on the city’s controversial property tax assessment freeze.

In her State of the City address Tuesday at the Columbus Convention & Trade Center, Tomlinson told a crowd of about 250 that the city has accomplished much in her first two years as mayor — including continuing the whitewater project; saving taxpayers millions by altering the city’s pension plan; improving the city’s bond rating; reducing crime overall, but especially copper theft; passing the Transportation Special Purpose Local Option Sales Tax; reforming prisons; completing of the Fall Line Trace trail and developing a City Services Center and natatorium on Macon Road.

She also unveiled the three-pronged “journey” to economic growth that included adopting redevelopment powers that many other cities enjoy and taking advantage of the city’s urban service districts that were built into the original charter, and can allow the Consolidated Government to use varying millage rates in different parts of the city to encourage development.

But the third leg of the plan, which Tomlinson has floated in other forums before, calls for an eventual referendum that would gradually “sunset” the assessment freeze.

The freeze was implemented by referendum in 1982, ostensibly as way to curtail government spending, protect seniors from being taxed out of their homes and to foster tax equity.

“Our budget at the time the freeze was instituted was $50 million,” Tomlinson said. “Today, it’s $267 million. So, if capping the city’s budget was its goal, it has failed.”

Tomlinson listed a litany of what she said were failures of the freeze to accomplish what it was intended to do and ways in which it has, in reality, been counter-productive.

Under Tomlinson’s sunset plan, people who are under the freeze would remain under the freeze as long as they own their current home.

“All those who have the property tax freeze would keep it,” Tomlinson said, then repeated the sentence three more times, drawing laughter from the crowd.

Under the freeze, when a property is transferred, it is refrozen at the current assessment and henceforth taxed on that frozen value. Under Tomlinson’s plan, the home’s value would be reassessed, but not frozen. It would fluctuate (up or down) with its fair market value.

But it would also be placed under a higher homestead exemption, Tomlinson said. She would increase the exemption from $13,500 to $20,000, which would mean a 10 percent tax cut on a $200,000 home, she said.

After the speech, former Mayor Bob Poydasheff said he liked Tomlinson’s vision for the future, but would prefer a minimum service fee over tackling the freeze. When he was mayor from 2003-2006, he proposed that anyone paying less than $500 in property taxes be assessed a fee that would bring their bill up to that level, but it never materialized.

“I think she’s doing a great job, and I think her vision for the future makes extraordinarily good sense,” Poydasheff said. “But I would like to get some further figures on the elimination of the tax freeze.”

City-wide Columbus Councilor Skip Henderson, who is also chairman of the council’s budget review committee, said he also liked the mayor’s vision for growth, but he needed to see more specific numbers before he could sign on with the sunset idea.

“She’s talked about sunsetting the freeze for a while, and I think if you do try to eliminate it, it’s the only responsible way to do it. It protects the folks who are already counting on it for their household budgets.”

He said the increased homestead exemption looks like a great incentive for people, “but we’re just going to have to crunch the numbers — see what the impact on the budget would be.”

The freeze was approved by voters by a 19,500 to 7,140 margin in 1982. A 1991 attempt to repeal the freeze by referendum failed by an 81-19 percent margin, even higher than the 73-27 margin by which it was created.

In the early 2000s, a group challenged the freeze’s constitutionality and won a favorable ruling at the Superior Court level. But the state and then federal supreme courts ruled it constitutional, so it stands.

“The proposed sunset is fair because it protects those who rely upon the freeze, and the tax break is an attractive incentive to all those who will join us in the new tax system of our future,” Tomlinson said.

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