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Editor's Note: The tax cut that wasn't
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Taxpayers take good news where they can get it. And a tiny amount of good news came last week, when City Council voted unanimously to roll back the property tax millage rate.

The change is incremental, miniscule even: A mere .02 mill reduction, from 12.50 to 12.48. (A mill is a thousandth of a dollar, by the way.)

In a press release headlined "City of Savannah Reduces Property Tax Rate," the vote was trumpeted as if it were a hugely magnanimous act. In actuality the tax reduction is more properly termed a "rollback."

A rollback is a state-mandated compensation to taxpayers due to a larger-than-expected increase in property tax collection.

Even the timing of the release was largely out of Council's hands; tax rates must be certified in August of each year.

And had Council not voted for the reduction? The City would then have been required by state law to send out a press release with the legally-mandated and quite different headline "Notice of Property Tax Increase."

If you're a politician, which headline do you prefer?

None of this stopped Alderman Van Johnson from saying "When possible, we reduce our millage rate, and obviously this was an opportunity to give back," a statement which in my view lies somewhere between poorly informed and disingenuous.

Again, as a homeowner myself, I'll take it. But everyone should know the backstory, which in this case comes courtesy of section 560-11-2-.58 of the Georgia Code, bluntly titled "Rollback of Millage Rate When Digest Value Increased by Reassessments."

The name says it all. That section was passed in 2000 as part of the Georgia Taxpayer Bill of Rights. It's intended to prevent backdoor tax increases, whereby a government takes in surplus money over the previous year because tax assessments are higher.

I expect politicians to tout anything as an accomplishment. I expect politicians to say, as the City claims, that an increase in the tax digest is due to an improved economy.

And I expect them to take credit for it. I suppose I'd do the same in their shoes.

But essentially what we have here is a City Council congratulating itself not only for following state law, but for not raising taxes. Puts the unanimous vote in context, eh?

By far the most problematic part is that the City advertises the tax cut as having something to do with SPLOST (Special Purpose Local Option Sales Tax).

SPLOST and its various clones we're plagued with in Savannah — a municipal tax rate nearly that of New York City — are of course not property taxes at all.

After the vote, Mayor Edna Jackson said of SPLOST: "This affords us the opportunity to develop critical infrastructure, and build police and fire stations without having to rely on property taxpayers to foot the bill."

You're certainly free to make the argument, as Madame Mayor does, that SPLOST helps keep property taxes down, in the sense that politicians will be less inclined to raise property taxes when they can tack on one more sales tax to the several we already pay.

But one is much less free to say SPLOST has anything to do with the City's obligation to property taxpayers under state law.

Some local observers even think that by explicitly claiming SPLOST as a reason for the millage cut, the City might have lost its claim to a rollback and could conceivably still be on the hook to make that required "Notice of Property Tax Increase" announcement. The law covering rollbacks refers only to property tax assessments, not total collection including sales tax.

But most local media dutifully reported the propaganda anyway.

(As a side note, SPLOST was never intended to fund essential services, as the mayor implies. New police and fire stations, while technically the kind of capital projects SPLOST covers, come uncomfortably close to the category of basic funding.)

Sales taxes are always sold to the public based on the idea that non-residents (for Savannah purposes read: tourists) pay a disproportionate share. In our case, it's estimated, I think a bit generously, that 40 percent of SPLOST comes from non-residents.

I've never understood why that's supposed to make me feel better. Regardless of who else pays sales taxes... we pay 'em too.

As for the whole improving-economy thing, my take is that much of the increase in local assessments is largely because of entrepreneurial improvements in previously depressed neighborhoods.

The areas just north and south of the Starland District, for example, have seen or are about to see much improvement. There's the existing Butterhead Greens/Foxy Loxy/Arnold Hall nexus in the Thomas Square area. (While SCAD doesn't pay property tax, student/staff activity clearly stimulates nearby businesses.)

In the near future, Hugh Acheson's hotly-anticipated "The Florence" restaurant coming to the One West Victory development will provide a similar tax digest boost to a somewhat run-down area.

The key part of this equation — and this also goes to the tourists-pay-sales-tax idea — is that these new improvements are happening outside downtown, in areas not driven by the tourist economy.

That's a huge and welcome sea change in terms of economic outlook. If City Council is going to tout anything, that's what they should be touting. And supporting.

While City Council is certainly free to trumpet their perceived successes, they should also remember that the economic vitality which indirectly led to the property tax rollback is largely due not to politicians or to sales taxes, but to the burgeoning partnership between local entrepreneurs and our growing intellectual/creative class.