Senate Finance committee pauses review of broad property‑tax overhaul that would cap local revenue and prioritize homeowners

A Senate Finance subcommittee on Thursday examined a comprehensive property‑tax proposal that would limit local governments’ year‑over‑year revenue growth and convert an existing local option sales tax penny into a homeowner‑prioritized floating homestead sales tax.

The bill would mandate a revenue cap for cities, counties and school systems equal to 3 percent or the consumer price index, whichever is greater, with exclusions for new growth and declared emergencies. It would also replace one existing local penny with a local homestead option sales tax (LHOST) that directs revenue to homeowner property first and then to other property classes; proponents said the change is a replacement penny, not a net new sales tax.

Sponsor and committee members framed the package as a homeowner relief and predictability measure. "We're trying to help the taxpayer and be respectful of all our stakeholders," the sponsor said, describing the bill as an effort to provide "relief, predictability and transparency" for homeowners. The sponsor noted the proposal coordinates changes so that both replacement pennies would take effect on Jan. 1, 2027, and that local distribution negotiations would remain on the usual 10‑year schedule in 2032.

Committee members pressed for practical examples and raised concerns about whether rural counties or cities with small sales‑tax bases would see meaningful homeowner relief and whether commercial properties would bear more of the tax burden. "In a county where you don't collect much sales tax, they might not see as much relief," one senator said. The sponsor and chair repeatedly explained that, if a locality adopts the floating LOST (FLOST) by resolution before the conversion, the FLOST is dollar‑for‑dollar with the existing LOST and should leave local revenue "even," while the LHOST directs more benefit to homeowners.

The committee heard detailed testimony from Courtney Knight, treasurer for the city of Atlanta, who warned that Atlanta relies on a separate metropolitan option sales tax (MOST) to fund water and sewer capital needs and that the city could not make up an estimated $150 million–$200 million shortfall if replacement language excluded or reduced access to equivalent local revenue. "There would be no way to make up the lost revenue," Knight said, urging clarity in the bill language about eligibility for cities that use MOST and similar dedicated pennies.

Sponsor and ledge counsel pointed to statutory language in the bill (referencing code language amending 48‑8‑109.31f and related lines) that would exempt MOST and certain other dedicated taxes from the proposed revenue cap, a point the sponsor said would preserve eligibility for cities like Atlanta. The committee asked ledge counsel to confirm the drafting.

After extended technical discussion on distribution mechanics, exemptions and how notices to property owners would be handled (the bill would require written notice by mail or electronically rather than relying on newspaper notice), the committee elected to hold the measure and reconvene so members and stakeholders could verify details and clarifying language. The sponsor said he would be available to follow up and requested additional time for verification.

Next steps: The committee paused formal consideration to allow staff and counsel to confirm statutory references and to supply further examples of local impacts; no formal vote was taken Thursday.