Senate passes massive tax cut, property tax limits

The Georgia Senate voted 49-6 to cut state income taxes by 10 percent over the next five years, a measure that still faces opposition in the House and a potential veto by the governor.

Sen. Chip Rogers, R-Woodstock, said the Senate' substitute to House Bill 1244 would be "the largest economic stimulus package this state has ever seen, the largest tax cut this state has ever seen."

The cuts would be phased in over five years, and eventually amount to an annual tax cut of $1.2 billion, about five percent of the state budget. Gov. Sonny Perdue has said the state can't afford that large a revenue cut.

The Senate also passed House Resolution 1246 by a 46-7 vote. If approved by voters this fall, this would limit the rate at which counties could raise the assessment on property for ad valorem tax purposes. Unless sold or improved, property values could not rise faster than the government inflation rate, recently around 4 percent to 5 percent.

It also would eliminate the one-fourth mill that is the state's portion of property taxes. In fiscal 2010, that income is estimated at about $90 million.

The governor cannot veto such ballot measures, which require a two-thirds vote in each chamber and a majority of voters in a statewide referendum.

The smaller tax cut drew some criticism from senators that said the state shouldn't cut taxes when many needs are unmet, as these may increase with the economy in a downturn.

"Some of us believe, the resources need to be in place," said Sen. Vincent Fort, D-Atlanta. "Government has a responsibility to do things for people when they can't do for themselves."

The House passed a version of HR 1246 that included similar property reassessment limits, but also a large tax cut. The House version would end the property tax on cars, along with the state portion of property taxes, for an annual cost of some $760 million when fully implemented in two years.

House leaders have said they prefer eliminating an entire tax rather than trimming an existing one. But their main objection to the Senate income-tax cut is that it can be vetoed by the governor.

The General Assembly has a week left to reconcile the two tax measures.