Lawyers spar over ‘thawing’ tax assessment freeze

The debate over whether to “thaw” the city’s property tax assessment freeze is rife with lawyers. Supporting the effort are Mayor Teresa Tomlinson, an attorney by trade, and other attorneys, such as Columbus Councilor Walker Garrett and others. Among the opposition are former city attorney Hardy Polleys and attorney Seth Harp, a former state senator.

At issue is the referendum to “thaw” the freeze, rather than repeal it. If the referendum were to pass on Nov. 8, it would keep the freeze in place for all who currently are under it, but it would put any homestead property bought after Jan. 1, 2017, under a more traditional fair market value system, where property is regularly reassessed. Those properties under the freeze would remain so until they changed hands, whether by sale or probate. They would then go into the fair market value system. Eventually, all frozen property would change hands and no property would remain under the freeze.

The property tax assessment freeze was voted into effect in 1982. It freezes the assessed value of a homestead property at the value at the time of the sale and keeps it there until the property changes hands. It is then reassessed at the current value and again frozen at that value.

Among the things the two sides disagree upon are:

Were the referendum to thaw the freeze pass, then be challenged and overturned in court, what would happen? The pro-thaw side maintains that were the thaw ordinance-to-be overturned in court, the city would revert to the tax assessment freeze. Opponents say a successful challenge would throw out both systems because the freeze would have been repealed. That would leave all homeowners under the fair market value system.

Harp and Tomlinson, who have debated the issue publicly, disagree on this and several other objections to the referendum.

“The bottom line is this legislation is setting up an unconstitutional process,” Harp said. “It’s going to result in litigation and in my opinion, the whole thing will be flushed down the drain and found to be unconstitutional. It’s creating two separate classes of taxpayers. Pre 2017 and post 2017.”

Tomlinson called Harp’s assessment “completely untrue.”

“The U.S. Supreme Court has ruled that there is nothing about having differing classifications of tax systems that violates the equal protection clause,” Tomlinson said. “In fact, most all tax systems have varying classifications. As long as it’s not — and this is the test — hostile or oppressive to a protected classification of persons. An offensive type of classification would be if we said we were going to tax all the Ethiopians or all the Hispanics.”

Chuck Palmer in an attorney with Troutman Sanders in Atlanta. He helped write the referendum legislation and was one of the attorneys who successful defended the tax freeze when it was challenged in court in the 1990s, so he is familiar with the referendum and the tax freeze, but not a resident of Muscogee County, so the referendum has no effect on him either way.

Palmer said the law was written in large part by the Georgia General Assembly’s Office of Legislative Counsel, whose job it is to write legislation that will stand up to constitutional scrutiny.

“In our view (having multiple classifications) is permissible,” Palmer said. “We worked on this with the legislative counsel. That’s what they do. They draft legislation and draft it in a constitutional manner.”

Another challenge to the referendum is that eliminating the freeze would endanger the city’s second permanent local option sales tax. Thaw opponents say it would, because the legislation allowing the city to hold a referendum creating the tax was predicated partly on the city having a tax assessment freeze. No, supporters of the freeze say, because the freeze wouldn’t be eliminated by the referendum. It would remain on the book in perpetuity. Even though at some point in time, no one’s property would qualify for it, the law would remain in effect.

“The local option sales tax is conditioned on the fact that we have the freeze. If somebody challenged that, that 1 percent will be at risk,” Harp said. “That 1 percent sales tax, if that goes away, that creates about a $30 million hole in the city budget.”

Tomlinson said thawing the freeze presents no threat to the OLOST. She agreed the statute allowing Columbus to hold the referendum requires the city to have the freeze in order to hold the referendum.

“However, that same statute says … that once you have it (the tax), there’s only one way to get rid of it. It has to be a resolution of Council, has to be put on the ballot and it has to be voted on,” Tomlinson said. “Even if it was declared that we no longer had the freeze, the legislature has set out what you have to do to get rid of the tax, and no court can substitute its judgment in something that is expressly set out by statute.”

Tomlinson said that protection would be unnecessary, because even if the referendum passes, it does nothing to remove the freeze from the law.

“The freeze will still be on the books,” Tomlinson said. “Nobody will be in it, but it will still be on the books.”

Palmer agreed.

“It will continue to be on the books, even if it’s not applicable anymore,” Palmer said. “It’s not like it ends. It will still be on the books. It might not be applied to anyone, but it will remain.”

Harp said the freeze is put at further risk because he believes the referendum would repeal the tax freeze as a constitutional amendment and put in a two-tier system that keeps currently frozen property frozen, but by statute, not by constitutional amendment. Statutes can be overturned by a court challenge, whereas constitutional amendments cannot, Harp said.

“You cannot go back,” Harp said. “Once you have repealed the constitutional amendment, you can’t go back.”

Palmer said the referendum would not affect the freeze’s standing as a constitutional amendment.

“It’s a part of the constitution, and that’s the way it will be preserved,” Palmer said. “That’s the way it will survive.”

The referendum to thaw the freeze will be on the Nov. 8 General Election ballot. Early voting for the General Election begins Monday.

This story was originally published October 15, 2016 at 4:35 PM with the headline "Lawyers spar over ‘thawing’ tax assessment freeze."