The bill would fund a property tax break worth an average of $200 to $300 per household this year. But after that, the break could very well be history, meaning local governments will have to look at either raising taxes or slash spending to make up for the lost state cash.
The House voted 117-55 to find $428 million to pay for the Homeowner Tax Relief Grant. Gov. Sonny Perdue slashed the money from his fiscal year 2009 budget proposal to help close the state's $2.2 billion shortfall.
State lawmakers will have to find more budget cuts to pay for the tax break and they haven't identified yet where the money will come from.
But the state-funded relief would only continue if Georgia revenue grows by 3 percent plus the rate of inflation. In the near term that's unlikely in the recession-ravaged state.
State Rep. Winfred Dukes, an Albany Democrat, said if the state eliminates the tax break it will result in "the largest property tax bill (increase) to the homeowners in the state of Georgia in the history of this state."
Democrats had championed a constitutional amendment to lock in the tax break. But the bill's sponsor, state Rep. Larry O'Neal, R-Bonaire, argued it was never meant to be an entitlement, stressing that funding the break this year keeps a promise the state made to pay.
Local governments have already sent out tax bills this year. If the state doesn't deliver the money, homeowners would be slapped with a supplemental bill to recoup the grant money.
"If you do not act, you will be imposing a $200 to $300 tax on homeowners," O'Neal told legislators.
The state Senate has yet to pass the measure. Senate leaders have expressed support, but it's unclear whether Perdue will sign the measure.
In August he called the grants ineffective in keeping property taxes down and said they should be scrapped. More recently his spokesman said the governor will "rejoice with lawmakers" if they can come up with a plan to avoid the cuts.
The tax relief grants are provided to local governments and passed along to homeowners as a tax credit.
The House was scheduled to also take up a separate bill Friday that would cap the rate growth by which property taxes can rise but the chamber delayed the vote.