“We need to look at new ways of, not necessarily generating more revenue, but different ways of obtaining revenue, and a HOST (Homestead Option Sales Tax) would help us do that,” Lee said.
Roger Tutterow, a Mercer University economics professor, said surveys indicate that property taxes are among the least popular taxes among the public.
“There’s probably some popular support for substituting sales tax for property tax,” Tutterow said. “I think you have to be careful in the sense that sales tax does vary with the level of economic activity, and so when you go through slow periods the HOST tax could drop off. The county does run that risk.”
J.D. Van Brink, chairman of the Marietta-based Georgia Tea Party, is a good example of someone who hates property taxes.
“Philosophically, the property tax is terrible,” Van Brink said. “It’s the first plank of ‘The Communist Manifesto.’ I am just philosophically opposed to a property tax, period. The HOST is moving in the right direction. I personally would support it.”
The HOST proposal was a campaign pledge Lee made in his re-election bid last summer.
The sales tax in Cobb is 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 tax would equal 1 percent, raising the sales tax to seven percent. A voter-approved HOST would be collected indefinitely, unless the referendum included a sunset date, or until a separate referendum is approved to end it.
Lee’s plan is to spend the coming year speaking about the idea with the community and legislators. He plans to begin holding town-hall meetings on the subject after the March referendum on renewing the school SPLOST.
He hopes the county commission will then request that the Cobb legislative delegation pass legislation during the 2014 General Assembly calling for a November 2014 referendum.
“It’s a little bit of time, but I think it’s worth looking at as an alternative to how we … raise revenue through property taxes, which is all over the board,” Lee said. “You could have three houses made by the same builder, the same year, the same features, right next to each other. One went through the banks, one went through foreclosure, all have different values, have different tax rates associated with them.
“There’s a way we think is better to deal with it and we’d like to have that discussion,” he said.
Lee acknowledged that Cherokee County voters rejected a HOST referendum in November, which he blamed at least in part on confusing ballot language.
Clint Mueller, legislative director for the Association of County Commissioners of Georgia, said a HOST creates zero new revenue for the county, though counties can choose to use up to 20 percent of the HOST revenue for capital expenses.
Lee said he would like to use 10 percent of the HOST to pay for capital maintenance costs, such as upgrading computers. Those expenses have been funded by surpluses in the past and “you can’t depend on a surplus,” he said.
Mueller, who lives in Woodstock and voted in favor of the HOST in the Cherokee referendum, believes people who own homes valued at $100,000 or more would likely benefit from a HOST.
The issue for homeowners is how much they spend each year buying sales-taxable items in their county, Mueller said.
“That’s the analysis each individual has to go through, to whether they are financially better off or worse off under a HOST, is how much do I spend a year in sales-taxable items, versus how much county property taxes do I currently pay a year,” he said.
In Cherokee County, officials had estimated the HOST would generate about $18 million a year. The county needed about $11 million to completely wipe out county property taxes on homesteaded property, he said.
Lee said Cobb County generates between $110 million and $120 million a year through its 1 percent sales tax, and collects about $80 million a year in homesteaded property tax.
A HOST “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-fund budget (portion) that it sets aside. It doesn’t set aside the fire and it doesn’t set aside the debt-service.”
State Rep. Ed Setzler (R-Acworth), chairman of the legislative delegation, suggested modifying Lee’s plan.
“Perhaps literally all county taxes would be funded through a HOST, so that those who are seniors who are not paying school taxes might literally have no ad valorem tax on their homestead property,” Setzler said. “That might be a counter proposal or something in between.”
State Rep. Alisha Thomas Morgan (D-Austell) said she was concerned about the impact raising the sales tax may have on the poor.
“My first concern is how it impacts low-income folks,” Morgan said. “I’m willing to look at it, though. If it’s about lowering property taxes, it’s worth considering.”
State Rep. Earl Ehrhart (R-Powder Springs) said he liked the idea, but that the HOST law needs a few changes before he would support bringing a HOST to Cobb.
“I agree with the philosophy behind HOST because it changes the tax burden from the property tax to the consumption tax. I’ve always been for that,” Ehrhart said.
But the capital projects to be funded via the HOST revenue, he said, don’t have to be approved by voters.
“You don’t have to be transparent with the public about it,” Ehrhart said. “We’ve got to get that out of there.”
Ehrhart, though, applauded the way Lee is slowly rolling out the plan.
“This is the way to do public policy. You bring in all stakeholders,” Ehrhart said. “The other thing he said, I’m thrilled to hear the chairman say this, is the idea that we’ve got to make sure that you can’t backdoor this with a millage increase. There’s a mechanism in place and other statutory construction that will allow you to do that. And at that point, I am a supporter of moving the tax burden from the property-tax payer to the consumption-tax payer.”
Mueller, of ACCG, believes the HOST was defeated in Cherokee in part due to confusing ballot language. Another big factor was opposition from the local tea party, he said.
“The tea party was pretty much against it, and the reason they were against is first of all they didn’t trust the commission up there to do what they said they were going to do,” Mueller said. “They didn’t trust the county not to raise the millage rate in the future.”