Oconee County Schools staff brief board on HB 581 property tax changes and potential budget impacts

Business services staff briefed the Oconee County Board of Education on Dec. 9 about House Bill 581, a recently passed state law that creates a floating homestead exemption and could affect the district's property tax revenue and millage-setting process.

Assistant Superintendent for Business Services Ryan Adams (presenting) said HB 581 "establishes a floating homestead exemption that limits the annual increase in property tax assessment on homestead properties to the inflationary rate," though he said the statute leaves the exact index to be determined by the state revenue commissioner. "It goes into effect January 1, 2025," Adams said.

Adams told the board the law includes an opt-out provision that requires local governments to begin the opt-out process by Jan. 1 and complete three public hearings and file documentation with the Secretary of State by March 1 if they choose to maintain local control. He said the district would need to consider timing and budget planning because the revenue commissioner has discretion to set the inflationary figure and no firm timeline for that decision had been provided to school systems.

Adams warned the board of a possible revenue impact: district staff estimated cumulative losses from 2014 through 2018 (sic: analysis presented covering recent years) could approach $13.9 million, with recent higher collections showing an average closer to $2.7 million per year in some recent years. "This could significantly impact property taxes for the school district," Adams said, adding that the effect would be a local-control question for the board.

He also described a new feature called an "estimated rollback rate" that would appear on tax notices and could complicate millage adoption and public communications. Adams said the district is not making a recommendation at this time; staff provided the briefing so the board could consider the law in its upcoming budget planning.

Board members asked how the revenue commissioner would determine and publish the inflationary rate and whether the district would receive that information in time to set budgets. Adams said the trainings he has attended did not include a firm timeline and that the commissioner has latitude in the method used to calculate the index.

Members also asked how HB 581 could affect the state funding formula (QBE) and the district's 5-mill share calculation. Adams said that, under current guidance, the state could use the higher digest value in some calculations, which he described as a potential "double hit" that could increase the local share deducted from state funding calculations.

Adams concluded that staff will continue to monitor trainings and guidance from state officials and provide further analysis as it becomes available to help the board decide whether to opt out of the law locally.

The briefing was informational; no board action was taken at the Dec. 9 meeting on HB 581.