Taxpayer’s Bill of Rights Needs Teeth to be Effective

By James Garland and John Marsh 

Many states have implemented tax and expenditure limitations as a means to staunch the runaway growth of government spending. Along those lines, the state of Georgia enacted a Taxpayer’s Bill of Rights, also known as TBoR, in 1999 to prevent “back door” tax increases on the part of local taxing authorities.  

Unfortunately, experience has revealed that the law is in drastic need of overhaul, as it lacks sufficient enforcement mechanisms. Quite simply, local and state officials have found ways to effectively circumvent TBoR’s provisions, a lesson that should be remembered if the General Assembly considers any further structural limitations to spiraling government spending. 

For example, in April 2004 the Clarke County Board of Education advertised and held three public hearings pursuant to a proposed tax increase, as prescribed by TBoR. The tax increase noted in the advertisements was a result of growth in the value of the county’s tax digest, with the property tax millage rate remaining the same as that of the previous year. But the Board adopted a budget in June that incorporated a millage rate increase that had never been the subject of advertisements or public hearings. TBoR specifies that, if after holding public hearings, the local taxing authority raises the amount of the proposed tax increase, the public hearings process must begin anew. The Board never held the second round of public hearings as required by law. 

Critics who regarded the failure to hold another round of public hearings as a clear violation of state law advised, in turn, the Board of Education (the requesting authority), the Athens-Clarke County Commission (the levying authority), the Clarke County Tax Commissioner, and the Department of Revenue of their concerns, to no avail.

The problem appears to stem from the interpretation of regulations by the Department of Revenue’s Property Tax division. The division’s regulations do, in fact, provide for a legitimate error in calculation. This provision allows for a 3 percent variance if the taxing authority’s submission results in an “overestimation” of the proposed tax increase.  

The Department of Revenue, however, applies this variance to the total amount of taxes collected for the previous year, not just the proposed increase. The variance is allowed for any reason or for no reason, as the case may be, and not just for the mathematical miscalculation specified in the regulation. 

These interpretations allow recommending and levying authorities to implement the kind of “back door” tax increases expressly prohibited by TBoR, rather than simply make an allowance for any legitimate miscalculation. With this interpretation, the Department of Revenue rendered the provisions of state Code and its own substantive regulations irrelevant. 

This predicament brought another problem to the fore. Once the tax digest for Clarke County had been certified, the Department of Revenue claimed that it had no legal authority to rescind that certification. In other words, once certification has been granted, there is no legal machinery to correct any certification that may have been granted in error or as the result of fraud. 

Clarke County taxpayers’ problem may be duplicated in county governments and school boards across the state. There is no way of telling how much money has been collected in illegal taxes by these various taxing authorities as a result of the regulatory standard employed by the Department of Revenue. When critics charged that state law had been violated and that departmental regulations had been misinterpreted, the bureaucracy, from the local level all the way up to the state level, denied that any problem existed.

There are remedies to rectify this situation. First, any further tax and expenditure legislation must cover not only the state government, but local taxing authorities as well. Second, tighten the definition to eliminate loose interpretation of the Department of Revenue’s regulations. Third, the Department of Revenue must have the legal authority to rescind tax increases that are found not to comply with state law or that have been enacted through fraud. Fourth, sufficient information to ensure compliance on the part of both requesting and taxing authorities must be made available to the public. Finally, penalties must be implemented for local and state officials who fail to fulfill their oversight duties.

Well-intentioned legislation is not enough. Without strong enforcement mechanisms, experience has shown that any such tax and expenditure legislation will be pointless.

This commentary was written for the Georgia Public Policy Foundation by John Marsh and James Garland. Marsh, who runs an Athens, Georgia-based database consulting company, earned a bachelor’s degree in Computing Business from Furman University. Garland, a Stephens County native, has bachelor’s degrees in social science education and in history from the University of Georgia, is completing a master’s in American history from American Public University and sits on the Development Authority of the Unified Government of Athens-Clarke County. The Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (December 23, 2005). Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.