Lee follows up on HOST tax proposal
by Jon Gillooly
September 27, 2012 12:47 AM | 5433 views | 15 15 comments | 12 12 recommendations | email to a friend | print
Jeanne Olsen, a sales associate at The Whimscal Nest, calculates the sales tax at the retail store on Whitlock Avenue in Marietta. <br> Photo by Jon-Michael Sullivan
Jeanne Olsen, a sales associate at The Whimscal Nest, calculates the sales tax at the retail store on Whitlock Avenue in Marietta.
Photo by Jon-Michael Sullivan
MARIETTA — In 2013, county residents can expect to hear a lot about Chairman Tim Lee’s proposal for an additional sales tax known as a HOST, which stands for Homestead Option Sales Tax.

In general, a HOST is intended to roll back a portion of property taxes charged on primary residences and offset that with a new sales tax. Lee said the average Cobb County household has the potential to save several hundred dollars a year on their property tax under the plan. However, if a HOST were put in place today, the sales tax would increase to 7 percent.

“It’s supposed to be a dollar-for-dollar offset, substituting a dollar of sales tax for a dollar of property-tax relief on your homesteaded property,” said Clint Mueller, legislative director for the Association of County Commissioners of Georgia.

Lee hopes that after presenting more detailed plans to residents next year, commissioners will vote next fall to request local legislation in the 2014 General Assembly. If both of those are approved, county voters would decide the issue in November 2014.

The HOST proposal was a campaign pledge Lee made in his re-election bid this summer.

“I don’t want to (ask) the Delegation to do something that we haven’t done an extensive outreach to the community,” Lee said. “We’re going to need to take six to eight months to (outline) what it represents, so that everybody is clear what it means to the individual home property tax owner.”

Goods purchased in Cobb are currently taxed at 6 percent. Four percent goes to the state, 1 percent goes to the county’s special purpose local option sales tax projects and 1 percent is another SPLOST for schools.

The HOST sales tax would equal 1 percent, but unlike the two SPLOST taxes, a HOST would remain permanently in place until voters approved a referendum to end it.

State Rep. Ed Setzler (R-Acworth), chairman of the Cobb legislative delegation, said he is open to hearing Lee’s proposal.

“With a county like ours, it has potential,” Setzler said. “I keep an eye more on spending than the source of the revenue. Those that are keeping spending in check and are being reasonable and smart about what we buy, then I think there could be some real advantages to it. I just need to understand exactly what he has in mind and I’m eager to hear from him.”

Lee said the county generates between $110 million and $120 million a year through its 1 percent sales tax, while it collects about $80 million a year in homesteaded property tax.

“It takes the general-fund portion, rolls it back, which is about $90, $95 million, sets aside about 10 percent for capital improvement, and then what’s left gets applied to business taxes across the board,” Lee said. “Folks have to understand: It’s the general budget that it sets aside. It doesn’t set aside the fire and it doesn’t set aside the debt service. And by the time that we get this going, the debt service will probably be gone anyway. So it just sets aside the general fund portion of your property tax.”

While there are a few exceptions, Lee said 99 percent of homeowners in the county will have property taxes rolled back.

Voters in Cherokee County, where Mueller, of the ACCG lives, will vote this November on whether to have a HOST. Those who own homes valued at $100,000 or more would likely benefit from a HOST, he said.

“I calculated how much I would probably pay in additional penny sales tax per year, versus how much I’d get in property-tax relief on my home,” Mueller said. “I’d probably come out a few hundred dollars better on the HOST than I would under the current system.”

Mueller said the system creates zero new revenue for the county with one exception: State law allows up to 20 percent of the HOST to be used for capital expenses, though Cherokee commissioners adopted a resolution pledging not to use any of the funds for capital, Mueller said.

Lee said his plan would be to use 10 percent of the HOST to pay for capital maintenance costs such as upgrading computers.

“In past years we’ve funded a lot of our capital improvements and stuff like that out of surplus,” Lee said. “The day of having huge surplus at the end of each year is gone because things are so tight.”

Lee said a HOST would also diversify the county’s revenue sources.

“By being diverse, in other words, having a different mix, you’re not as vulnerable to each fluctuation in each revenue stream,” Lee said. “That’s a more stable financial model.”

In an economic downtown, he said, sales taxes take the immediate hit and are later followed by property taxes. In a recovery, sales taxes are first to recover, followed later by property taxes.

In addition, a certain percentage of sales tax is paid for by non-Cobb residents.

“Now you’re lessening a burden on Cobb residents who pay 100 percent of the cost now that go through property taxes,” Lee said. “You can argue all day long whether it’s 5 percent or 30 percent, but even if it’s 5 percent, that’s a 5 percent improved tax position for homeowners that they don’t have to cover.”

Renters, such as Cobb’s large population of college students, though, would pay more.

“They wouldn’t get much benefit from a HOST because they don’t own a home, but they would contribute more to tax relief for homeowners in that they paid this additional penny, because most all of them are shopping at the grocery stores in Cobb County,” Mueller said. “With any type of tax reform, you’re always creating winners and losers. It’s just a question of who are the winners and who are the losers.”

DeKalb and Rockdale are the only two counties in Georgia that already have a HOST, a tax that was not created until 1995, Mueller said.

Instead, many counties have a LOST — a local option sales tax, which was created in the early 1980s.

A LOST is a penny just like the HOST tax, but the difference is the amount of money that’s raised provides a tax rollback on all types of property — industrial, agricultural, commercial, rental.

“You name it, it’s everything,” Mueller said. “A HOST tax raises the same amount of money as a LOST tax. However with a HOST tax, 80 percent of it has to go towards property tax relief on somebody’s homesteaded property. It targets the tax relief to the primary residence, so for somebody that owns nothing but a home in Cobb County, they’re going to get much more tax savings from a HOST than they would from a LOST. But if you’re somebody that owns lots of other types of properties, maybe you have a big farm or maybe you have commercial properties, things of that nature, then a LOST may by more financially beneficial to you.”

By the time the HOST law was created, most counties in Georgia had already adopted a LOST tax. The law prevents a county from adopting both.
Comments-icon Post a Comment
September 27, 2012
In order to save a "couple of hundred dollars" on each owner's prop taxes, here's the math:

$200 prop tax savings = $20000 times 1% HOST rate. That's TWENTY THOUSAND in taxable consumables in 12 months, or $1666.67 in consumable purchases PER MONTH!

Remember to ignore your mortgage and car loans when thinking about that monthly amount - those monthly payments are either tax exempt, or the tax is included in how your payments are computed for the multi-year term of the loan.

Then, also remember that whatever you save in prop taxes you will pay in a sales tax (not dollar for dollar to boot unless you buy $20k in taxable consumables).

Tell me again, how is this going to work out to a net savings (never mind the "computers" capital expenditure)?
September 27, 2012
We need a constitutional amendement requiring that all TAX votes have "TAX" appear clearly in the description on the little voting computers. They should not be calling these pigs anything other than what they are, "TAX"

But no, the legislators are too busy making sure voting fraud that didn't never exist is stopped.

I say if they can't prove they stopped some SERIOUS fraud, they need to pay us back all the $$$$$ they are wasting on it!!!
September 27, 2012
This is just more of East Cobb and West Cobb wanting to sponge off those of us in the cities.

Cobb millage might go down, but our city millages won't, but we city residents would be stuck with the sales tax increase.

Once again the welfare recipients in East Cobb and West Cobb want to pick my pockets!

Why don't y'all move somewhere you can afford instead of trying to trick me into redistributing my wealth to your country McMansion?

I thought you people were supposed to be conservative??? But NO, you are just Republicans.
Had Enough of Tim
September 27, 2012
He's at it again! Let him know that we are not a

happy hunting ground for new taxes.
September 27, 2012
Just goes to show that Tim Lee never met a taxing scam he didn't like.

Ever heard the phrase "bait and switch" ?

This is just another way to put off the spending cuts that are needed to put this county on the right track.
Kennesaw Resident
September 27, 2012
"No" to HOST!
Samuel Adams
September 27, 2012
Wpw, just look at these politicians and bureaucrats pit groups of people against each other. Homeowners vs. college students (uh, duh, the students belong to the homeowners in most cases). They've learned the Alinsky tactics of Obama and are taking full advantage of all of us.

Oh gee, says the head of the county commissioner's association (which by the way refuses to endorse federal immigration law)....here's a great way to tax ourselves.

How about ridding the counties of the expenses associated with illegal immigration (for example) and NOT raising any taxes? How about encouraging county commissions across Georgia to comply with state law? Just sayin...
September 27, 2012
“It’s supposed to be a dollar-for-dollar offset, substituting a dollar of sales tax for a dollar of property-tax relief on your homesteaded property,” said Clint Mueller, legislative director for the Association of County Commissioners of Georgia.

Unless a moratorium or some other kind of restriction on increasing the millage rate or indiscriminately raising property assessments is also linked to this idea I would be very reluctant to vote for it.

In other words I don't trust our elected officials (particularly Tim Lee) to exhibit appropriate restraints when it comes to spending and budgeting unless there are some "stops" incorporated into the process.

September 27, 2012
Exactly, It is a tax increase shell-game. They are just finding more ways to get into your pocket.

A property assessment increase is all they need to double dip the taxes for a homeowner. My property has not lost one penny of tax assessed value since I bought it in 2003. Figure that one out...

I thought Republicans were for less taxes...

September 27, 2012
NO TAX INCREASE for Comissar Tim Lee!
Shared Burden
September 27, 2012
It seems to me that this spreads the tax load a bit more, which I like. As Cobb has one of the lowest sales taxes in the state, I don't think it's a big burden for those who don't pay property taxes like college students, but at least they are then contributing to the general fund. Property owners have been hard hit during the Obama economy, and any relief is appreciated. Plus the SPLOST can go away later. At least on the surface, I think this is a good idea.
Just Me
September 27, 2012
No, it's not "spreading the load" it's increasing taxes. Period. Don't buy into Mr. Tax's latest.

I just bought some things in Fulton County and almost croaked when I saw the eight percent sales tax. We don't know how fortunate we are to have been spared the craziness until now. Don't give in. Make them fix their spending problems. And oh...what's the bias against college students? Do you realize that these poor kids will be paying their student loans the rest of their lives? My kids don't have any loans, fortunately, but they know those with upwards of $80,000 just for undergrad degrees. These kids have been fully taken advantage of by the system and will be serfs all their lives with degrees that mean nothing in an Obama economy.
Russell M.
September 27, 2012
Chairman, why would county residents approve a new tax? Unless all of the new 1% sales tax goes to property tax reduction, it is a tax hike. I'm sure the county can do without new computers, there are also other savings that I can see just driving around the county. Voters need to be aware of this. Apparently Tim Lee has learned nothing from his support of the TSPLOST.
Voice of Reason
September 27, 2012
I see HOST as a general tax increase since the Commissioners can play with the millage rates and property values to reduce the actual cut in property taxes. Nothing will get my vote unless there's transparency and reasonable expenditures with tax process - and I haven't seen that lately in Cobb County.

Just what are they "really" doing with the current budget - overpaying the County Manager, etc?
September 27, 2012
Of course its a tax increase. Look at Lee's own numbers. He says the sales tax takes in around $110 - $120 Million while the property tax only brings in around $80 - $85 Million. Last time I checked a $30 Million increase is a tax increase. It just gives more money to be spent and does not address the spending issues CObb has.
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