Demorest backs property tax rollback proposal

DEMOREST, Ga. — The Demorest City Council unanimously approved an intergovernmental agreement Thursday supporting a proposed countywide property tax rollback sales tax, moving Habersham County one step closer to placing the measure before voters in November.

The agreement is part of a countywide effort to implement the one-cent sales tax authorized under House Bill 581 and Senate Bill 33. If approved by voters Nov. 3, the sales tax would replace a portion of local property tax revenue by reducing millage rates while maintaining funding for local government services.

The council approved a resolution authorizing Mayor Jerry Harkness to sign the agreement following a presentation by Habersham County Manager Tim Sims and consultant Phil Sutton.

Proposal tied to House Bill 581

Sims told council members discussions about the proposal have been underway for nearly two years following passage of House Bill 581, which created Georgia’s floating homestead exemption and authorized eligible local governments to seek voter approval of the new sales tax.

He said the Georgia Department of Revenue has begun referring to the measure as a “property tax rollback LOST,” rather than a Flexible Local Option Sales Tax, or FLOST.

Sims explained that because Habersham County and its municipalities opted into the statewide floating homestead exemption, they are eligible to ask voters to approve the additional sales tax.

“The state legislature, by us opting into House Bill 581 to keep the property assessments frozen, we’re allowed to do this sales tax,” Sims said.

He also explained changes approved this year under Senate Bill 33 will allow local governments to begin applying approximately five months of sales tax collections toward reducing property taxes during the first year rather than waiting a full year.

Councilman Shawn Allen asked how much revenue would be available during the first year. Sims said the initial rollback would be based on roughly five months of collections, with a full year of collections available in subsequent years if voters approve the measure.

Projected tax savings

Sutton said his analysis projects the proposed one-cent sales tax would reduce property tax millage rates by approximately 3.608 mills across Habersham County and participating municipalities.

For Demorest, Sutton said that would reduce the city’s millage rate by about 54.3%.

Using a $350,000 home as an example, Sutton estimated a Demorest property owner would save about $505 on county property taxes and another $505 on city property taxes, for a combined annual savings of approximately $1,010.

Sutton emphasized those figures are projections based on current property values and anticipated sales tax collections.

He also noted the tax could only be used to replace property tax revenue.

“The main aim of FLOST — in fact, the only purpose — is to provide property tax relief,” Sutton said.

Mayor Jerry Harkness asked whether replacing property tax revenue with the proposed sales tax would limit how the city could use those funds for operations such as police and other municipal services.

Sutton said it would not.

“It’s a replacement,” he said. “Anything you put property tax on, you can spend this. We take it out of this pocket, so we’ll put it over in this pocket.”

Referendum scheduled for Nov. 3

Sutton said each municipality must approve the intergovernmental agreement before the Habersham County Board of Commissioners can formally call the Nov. 3 referendum.

If approved by voters, the sales tax would take effect Jan. 1, 2027, and remain in place through Dec. 31, 2031. Any renewal would require authorization from the Georgia General Assembly followed by another local referendum.

The ballot question would simply ask voters whether they want to authorize a one-cent sales tax to reduce property taxes.

Sims said Habersham County plans to begin a public education campaign in late August to explain the proposal through town hall meetings and presentations to civic organizations.

“We can educate the folks,” Sims said. “We’ll be doing presentations and things of that nature probably starting late August and running through October.”

He said the county also plans to work with the Habersham County Development Authority and the Habersham Chamber of Commerce to help educate residents before the referendum.

Demorest joins several Habersham County municipalities that have now approved the intergovernmental agreement as county officials work toward meeting statutory deadlines to place the measure on the November ballot.