Fundamentación teórica de la propuesta

An important source of revenue to fund the operations of the Consolidated Government is ad valorem property taxes. Ad valorem property taxes accounted for an annual average of approximately 30.4% of Consolidated Government General Fund revenues for the years ended December 31, 2009 to 2013 and are budgeted to account for approximately 30.9% of General Fund revenues for the year ending December 31, 2014. Ad valorem property taxes are levied annually in mills (one tenth of one percent) upon each dollar of assessed property value.

Property Subject to Taxation

Ad valorem property taxes are levied, based upon value, against real and personal property within the Consolidated Government. There are, however, certain classes of property which are exempt from taxation, including public property, religious property, charitable property, property of nonprofit hospitals, nonprofit homes for the aged, and nonprofit homes for the mentally handicapped, college and certain educational property, public library property, certain farm products, certain air and water pollution control property, and personal effects.

In addition, the Consolidated Government allows exemptions from ad valorem taxation for (1) homesteads, or owner-occupied residences, of all persons, in the amount of $5,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (2) homesteads, or owner-occupied residences, of persons who are over age 65 and whose net income from all sources (including the spouse’s income) does not exceed $10,000, in the amount of $10,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (3) homesteads, or owner-occupied residences, of disabled veterans and certain un-remarried surviving spouses of disabled veterans, not to exceed the greater of $50,000 or an amount determined under federal law, (4) homesteads, or owner-occupied residences, of persons who are totally disabled with net income from all sources (including the spouse’s income) not exceeding $20,000, for the full value of that homestead (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (5) homesteads, or owner-occupied residences, of persons who are totally disabled, in the amount of $10,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (6) homesteads, or owner-occupied residences, of un-remarried surviving spouses of peace officers or firefighters who were killed in the line of duty, for the full value of that homestead and (7) the inventory of companies that manufacture or warehouse goods in Richmond County, known as the “freeport” exemption.

Tax Reform

HB 386 eliminated the ad valorem taxation of vehicles and replaced it with a one-time title tax (the “Title Tax”) that is levied whenever the title to a vehicle is registered to a new owner (except if a transfer is made between immediate family members). The Title Tax is based upon the value of the vehicle and was levied at a rate of 6.5% in 2013. The Title Tax is currently being levied at a rate of 6.75% in 2014 and will be levied at a rate of 7.0% in 2015. The revenues will be shared among the State and local governments by formula. In addition, HB 48 gives the County the option to exempt some or all of business inventory from ad valorem taxation. See “LEGAL MATTERS – Tax Reform.”

Assessed Value

Assessed valuation, which represents the value upon which ad valorem property taxes are levied, is calculated as a percentage of fair market value. Georgia law requires taxable tangible property to be assessed, with certain exceptions, at 40 percent of its fair market value and to be taxed on a levy made by each tax jurisdiction based on the assessed valuation. Georgia law requires certain agricultural real property to be assessed for ad

The chief appraiser of the Consolidated Government is required to submit a certified list of assessments for all taxable property, except motor vehicles and property owned by public utilities, within Richmond County to the Richmond County Board of Tax Assessors. The Richmond County Tax Commissioner is required to present the tax returns to the Board of Tax Assessors by April 11 of each year. The Board of Tax Assessors is required to complete its revision and assessment of returns and to forward the completed digest to the Tax Commissioner by July 1 of each year. The Tax Commissioner then has to forward the digest to the State of Georgia Revenue Commissioner for examination and approval. The State of Georgia Revenue Commissioner has the authority to examine the digest for the purpose of determining if the valuations of property are reasonably uniform and equalized between and within counties. Assessments may also be subject to review at various stages by the Richmond County Board of Equalization and by state courts.

The State of Georgia Motor Vehicle Tax Unit assesses the value of motor vehicles by make, model, and year by county and provides this information to each county tax office. The State of Georgia Property Tax Unit assesses the value of the property of public utilities and divides the assessment into two parts, assessed value of property and assessed value of franchise, and provides these amounts to the Consolidated Government, which bills these taxes to the utilities.

Annual Tax Levy and Limitation on Annual Tax Levy

Generally. The Consolidated Government determines a rate of levy for each fiscal year by computing a

rate which, when levied upon the assessed value of taxable property within its territorial limits, will produce the necessary amount of property tax revenues. The Consolidated Government then levies its ad valorem property taxes.

In 1980, the voters of Richmond County approved a local amendment to the Constitution of the State of Georgia that prohibits any taxing jurisdiction in Richmond County from levying or collecting ad valorem taxes in any tax year at a mill rate higher than the ad valorem tax mill rate described below, unless the mill rate is approved by the voters. The maximum mill rate each such local taxing jurisdiction may levy in any tax year without a referendum is determined as follows: (1) multiply the mill rate levied by the local taxing jurisdiction for the tax year beginning January 1, 1979, exclusive of any grants from the State of Georgia that may have been used to reduce the net millage rate for 1979, by 107%; (2) then multiply the mill rate determined in (1) above by a fraction the numerator of which is the net taxable digest for the local taxing jurisdiction for the tax year preceding the year the tax is to be levied rounded off to the nearest $10,000,000, and the denominator of which is the net taxable digest for the local taxing jurisdiction for the tax year in which the levy is to be made, rounded off to the nearest $10,000,000 (the “Gross Tax Cap”); (3) then, reduce the mill rate determined in (2) above by the mill rate that, if levied against the taxable property within the local taxing jurisdiction, would produce an amount of revenue equal to the amount of any proceeds received by the local taxing jurisdiction in the immediately preceding tax year from a local sales and use tax (the “Tax Cap Available After Sales Tax Credit”). The mill rate determined after the reduction provided for in (3) above is the maximum mill rate that may be levied in the applicable tax year by the local taxing jurisdiction except as described in the first sentence of this paragraph.

Set forth below are (a) a table showing calculations of the Gross Tax Cap and the Tax Cap Available After Sales Tax Credit for each of the Consolidated Government’s taxing jurisdictions: (1) the General Fund, (2) Urban Services Fund and (3) Fire Protection Fund (together, the “Taxing Jurisdictions”), (b) a table reflecting the remaining tax cap available to be levied under the current Tax Cap Available After Sales Tax Credit for each of the Taxing Jurisdictions and (c) a table reflecting the Consolidated Government’s utilization of the current tax cap for each of the Taxing Jurisdictions. Each such table reflects calculations for 2013.

Gross Tax Cap General Fund Urban Services Fund Fire Protection Fund 1979 Millage Rate 16.520 25.960 2.900

1979 Millage Rate at 7% Growth 17.676 27.777 3.103

Prior Year Digest (in 000,000’s) $4,651 $918 $3,617

Current Year Digest (in 000,000’s) $4,687 $899 $3,675

Gross Tax Cap(1) 17.541 28.364 3.054

(1)

Calculated as follows: (1979 Millage Rate x 1.07) (Prior Year Digest/Current Year Digest) Tax Cap Available After Sales Tax Credit

General Fund Urban Services Fund Fire Protection Fund

Gross Tax Cap(1) 17.541 28.364 3.054

Sales Tax Credit(2) 5.983(3) 9.788 0.000

Tax Cap Available After Sales Tax Credit 11.558 18.576 3.054 (1)

Calculated as follows: (1979 Millage Rate x 1.07) (Prior Year Digest/Current Year Digest).

(2)

Calculated as follows: (Prior Year Sales Tax Collections/ Current Year digest). Includes sales tax collected outside the Urban Services District.

(3)

Includes only sales tax collected outside the Urban Services District.

Tax Cap Available After Sales Tax Credit Less Total Millage

General Fund Urban Services Fund Fire Protection Fund

Tax Cap Available After Sales Tax Credit 11.558 18.576 3.054

Less Net Millage Rate 8.042 7.987 2.140

Less Capital Outlay Millage 0.781 0.000 0.000

Tax Cap Available After Sales Tax Credit

and Less Total Millage 2.735 10.589 0.914

Utilization of Tax Cap

General Fund Urban Services Fund Fire Protection Fund $ Amount Available to be levied Under Tax Cap and

not assessed in 2013 (000’s) $12,817 $9,520 $3,359

% of Tax Cap Utilized in 2013 84.4% 62.7% 70.1%

In the event the Consolidated Government desires to seek approval at a referendum for the levy in any tax year of a mill rate greater than the mill rate determined as described above, the Consolidated Government must hold not less than three public hearings on the proposed mill rate at different locations within the limits of the

The tax limitation described above excludes any expenditures made or caused to be made by the Consolidated Government as determined from time to time on a case by case basis for the following express purposes: (a) bonded indebtedness incurred as a result of a referendum by the voters approving such bonded indebtedness, and (b) any expenditure for the replacement of or provision for any direct loss suffered by the Consolidated Government as the result of any peril, catastrophe, or emergency that includes, but is not limited to, fire, lightning, wind, hail, water, storm, war, insurrection, riot, earthquake, nuclear occurrence, seizure, explosion, freezing, aircrafts, vehicles, or other similar catastrophe or acts of God; with the amount to be levied to cover such emergency not to exceed the actual cash outlay, considering all insurance payments from other sources to which the Consolidated Government may be entitled, which the Consolidated Government actually incurs as the result of said loss, including professional fees and other similar expenses required to place the Consolidated Government in the same position in which it would have been had such perils, catastrophe, or emergency not occurred; provided, however, the Consolidated Government declares by a two-thirds majority that the emergency does exist and the expenditures are in fact to be made as the result of the emergency.

The General Assembly of the State of Georgia is permitted by local law, to authorize the levy of additional assessments to provide for capital improvements, judicial commands and precepts, or mandated programs not funded by state or federal funds.

Procedural Requirements. Effective January 1, 2000, the General Assembly of the State of Georgia enacted

Senate Bill 177, Act 431, known as The Property Taxpayer’s Bill of Rights (the “Taxpayer’s Act”). The purpose of the Taxpayer’s Act was to prevent indirect tax increases resulting from increases to existing property values due purely to inflation. The Taxpayer’s Act requires that each taxing jurisdiction located within the State (including local governments and political subdivisions of the State, such as the Consolidated Government), roll back (or reduce) the millage rate in each year to offset any inflationary increases in the tax digest of such taxing jurisdiction that have occurred since the last tax year. Any local government or taxing jurisdiction that elects to set the millage rate higher than the rollback rate must follow certain requirements to notify the public of such increase, including three public hearings, the publication of a notice of the increase in the local newspaper and the publication of a press release to explain the intent of the increase in taxes. The Taxpayer’s Act also requires that the notice of assessment sent to any taxpayer who receives a 15% increase or greater in their property value contains a simple, non-technical description of the basis for the increased assessment and permits taxpayers to have access to records used in preparing the increased assessment and to record any meetings or hearings held in connection with an appeal of their property tax assessment. The Taxpayer’s Act also entitles any taxpayer who wins an appeal by demonstrating a property value that is 85% or less than the proposed assessed value (80% for commercial property) to recover litigation costs and reasonable attorney’s fees.

Property Tax Collections

The Consolidated Government bills and collects its own property taxes. Real and personal property taxes, except motor vehicle taxes, are levied in July of each year on the assessed value listed as of January 1. Taxes levied by the Consolidated Government in July are normally billed on September 15 and are normally payable on or before November 15. Motor vehicle taxes are levied, due, and collected on a staggered basis throughout the entire calendar year. Interest of 12% per annum applies to taxes paid after the due date, and a one-time penalty of 10% applies to taxes paid more than 90 days after the due date.

All taxes levied on real and personal property, together with interest thereon and penalties for late payment, constitute a perpetual lien on and against the property taxed arising after January 1 in the year in which taxed. The lien normally becomes enforceable on March 20 of the following year. Georgia law provides that taxes must be paid before any other debt, lien, or claim of any kind, except for certain claims against the estate of a decedent and except that the title and operation of a security deed is superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than the property specifically subject to the title and operation of the security deed.

Collection of delinquent real property taxes is enforceable by tax sale of such realty. Delinquent personal property taxes are similarly enforceable by seizure and sale of the taxpayer’s personal property. There can be no assurance, however, that the value of property sold, in the event of a tax sale, will be sufficient to produce the amount required to pay in full the delinquent taxes, including any interest or penalties thereon.

When the last day for the payment of taxes has arrived, the tax collector may notify the taxpayer in writing of the fact that the taxes have not been paid and that, unless paid, an execution will be issued. At any time after thirty days from giving the notice described in the preceding sentence, the Clerk of the Consolidated Government may issue an execution for nonpayment of taxes to the Sheriff, or the Tax Commissioner, as ex-officio Sheriff. The Sheriff, or the Tax Commissioner, as ex-officio Sheriff, may then publish a notice of the sale in a local newspaper weekly for four weeks and give the taxpayer ten days written notice by registered or certified mail. A public sale of the property may then be made by the Sheriff, or the Tax Commissioner, as ex-officio Sheriff, at the Richmond County Courthouse on the first Tuesday of the month after the required notices are given.

Historical Property Tax Data

Set forth below is information concerning the assessed (40% of fair market value) value of taxable property within the Consolidated Government for fiscal years 2008 through 2013.

Assessed Values

Fiscal Year

Real & Personal Property(1) Public Utilities(2) Motor Vehicles(3) Mobile

Homes(4) Gross Tax Digest

Bond Exemptions Net Bond Digest Maintenance & Operations Exemptions Maintenance and Operations Tax Digest(5) Estimated Actual Value 2008 $4,611,738,307 $129,257,416 $339,952,300 $25,165,720 $5,106,113,743 $247,717,591 $4,858,396,152 $567,238,203 $4,538,875,540 $12,765,284,358 2009 4,578,977,645 134,594,672 351,446,930 23,199,680 5,088,218,927 273,113,718 4,815,105,209 616,102,791 4,472,116,136 12,720,547,318 2010 4,638,765,959 139,086,078 315,423,040 19,747,328 5,113,022,405 244,221,485 4,868,800,920 593,279,505 4,519,742,900 12,782,556,013 2011 4,660,645,980 140,306,302 318,763,820 19,985,635 5,139,701,737 267,151,120 4,872,550,617 608,123,796 4,531,577,941 12,849,253,843 2012 4,746,686,280 150,294,484 338,312,190 18,756,473 5,254,049,427 269,061,495 4,984,987,932 603,772,664 4,650,276,763 13,135,123,568 2013 4,799,582,972 143,796,930 364,089,090 18,944,271 5,326,413,263 283,531,265 5,042,881,998 640,326,662 4,686,086,601 13,316,033,158 (1) _{The State requires all counties to assess real estate and personal property at the rate of at least 40% of estimated actual value, with the exception of timber, which is assessed at 100%.}

(2)

The State of Georgia Property Tax Unit assesses the value of the property of public utilities at the percentage of fair market value used by the Consolidated Government. The Property Tax Unit then divides the assessment into two parts, assessed value of property and assessed value of franchise, and provides these figures to the Consolidated Government which bills these taxes to the utilities with the amount of tax for each.

(3) _{For motor vehicles not subject to the Title Tax, the State of Georgia Motor Vehicle Tax Unit assesses the value of motor vehicles by make, model, and year by county and provides this information} to each county tax office. The State of Georgia assesses the value of motor vehicles at the percentage of fair market value used by the Consolidated Government. Effective in 2013, the ad valorem property tax on motor vehicles was eliminated and was replaced with the Title Tax that is levied whenever the title to a vehicle is registered to a new owner. See “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION – Tax Reform” and “LEGAL MATTERS – Tax Reform.”

(4) _{The State of Georgia assesses the value of mobile homes at the percentage of fair market value used by the Consolidated Government.} (5) _{Total assessed value, after deducting exemptions, for purposes of levying tax for the M&O of the Consolidated Government.} Source: Georgia Department of Revenue; Consolidated Government Tax Commissioner

Set forth below is information concerning the rate of levy of property taxes (in mills) per $1,000 of assessed value, or millage rates, of the Consolidated Government and all overlapping governments which levied property taxes for the calendar years 2009 through 2013.

Consolidated Government Calendar Year Maintenance & Operation(1) Debt Service(2) Capital Outlay(2) Urban Service District (“USD”)(3) Fire District(4) Blythe Fire District(5) Richmond County School System State of Georgia Inside USD Total Outside USD Total(6) 2009 8.149 0.00 0.791 8.058 1.616 3.029 19.342 0.25 36.590 30.148 2010 8.056 0.00 0.782 7.985 1.598 2.808 19.110 0.25 36.183 29.796 2011 8.075 0.00 0.784 8.002 1.602 2.808 19.110 0.25 36.221 29.821 2012 8.085 0.00 0.785 8.026 2.152 3.358 19.110 0.25 36.256 30.382 2013 8.042 0.00 0.781 7.987 2.140 3.349 19.982 0.15 36.942 30.945 (1)

Applies to entire territorial limits of Richmond County and is subject to the legal limit described in “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION—Annual Tax Levy and Limitation on Annual Tax Levy” herein.

(2)

Applies to entire territorial limits of Richmond County.

(3)

Applies to the area consisting of the former City of Augusta, designated as the “Urban Services District.”

(4)

Applies to the area consisting of the former unincorporated area of Richmond County.

(5)

Applies to the area consisting of the City of Blythe.

(6)

Represents aggregate millage rate for area consisting of the former unincorporated area of Richmond County. The Cities of Blythe and Hephzibah did not levy property taxes for the years shown.

Source: Richmond County Tax Commissioner.

Set forth below is information concerning property tax levies and collections of the Consolidated Government for calendar years 2009 through 2013.

Tax Collections Percentage

of Collection of Current Year’s Levy to Tax Levy Percentage of Total Tax