October 1, 2019

Georgia City To Raise Property Taxes Nearly 41%

Claxton, Georgia, property owners are about to take a serious financial hit thanks to a city council vote that hiked property taxes 40.7 percent.

Although the rate will not be formally approved until early October, the city plans to use the additional funds to replenish “enterprise funds” and surplus funds that have been used in recent years to fund employee salaries and support local charities and the Chamber of Commerce.

Before you strike out against the heartless municipal government, however, get the rest of the story. Claxton has not raised property taxes in five years, relying on rising home values to add to city revenues rather than an increased millage rate. Unfortunately for Claxton, this has only actually worked for two of the last five years, 2017 and 2018. However, for many years prior, the city has operated as if all funding were proceeding like gangbusters, continuing to hire more employees and distribute financial support to various local organizations.

Claxton predicts the increase will yield an additional $139,069 for the city in 2019, creating total property-tax revenues of $481,928. The city could not delay raising property taxes any longer unless it drastically reduced spending (not likely for a city government!) since the last two city audits indicated the surplus funds mentioned above are “completely depleted” and the city is operating in the red. The vote on the tax hike did not immediately make the decision law because Claxton must allow public hearings and meet certain requirements for advertising the rate increase before it enacts it.

Although the rationale for the rate hike may be a sound one, it is likely to be highly unpopular both because of the size (more than 40 percent never makes for a positive headline) and because the city was expected to generate about $1 million more in property-tax and motor-vehicle-tax revenues in 2019 even at the current rate. However, the current budget and near-total depletion of emergency funds made the hike unavoidable, the city council claimed.

The hike could result in more properties going to tax auction in Claxton in the coming years. Since PIP Group already has an established presence at many Georgia tax auctions, our investors will be well-positioned to observe the developments in this and other areas of the state as tax policies change during and after the next election. Learn more about why we invest in Georgia and what strategies we employ there by checking out our “Strategy” section at PIPGroup.com.

About the author 

Charles Sells

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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