The public hearings in Coweta County to consider whether to opt in or out of House Bill 581 were well-attended and often heated. That was certainly expected by all parties involved. All of us have struggled with inflation – and inflation of property values – in recent years. It has affected homeowners, household consumers, business owners, and local governments, too.
The Coweta school board voted to opt out of HB 581 on February 11th. On February 14th our board followed up by passing a resolution for local legislation to establish a 5 percent annual cap (maximum) for both property value growth or decrease for Coweta homeowners, and a significant increase to homestead exemptions for all senior citizens 65 and older (including 100 percent exemptions for those 75 and older). It also calls for removing the property tax cap for schools now set at 20 mills (as allowed by Georgia State Law through a local voter referendum for school districts, and already allowed for cities and counties), and increasing local school system reserve limits from 15 percent to 20 percent (compared to unlimited reserves for local cities and counties). The resolution includes a ten-year sunset provision to evaluate the effect of this structure and for local voters to consider re-opting for it.
The Board’s resolution calling for an alternate cap-and-senior-exemption package seeks to protect homeowners, but also protect local citizens pre-K through retirement age. It works financially, while the most commonly discussed state caps for school systems do not. It would be a local cap set to local needs and local economic realities. It may or may not fit Georgia’s other 180 school systems–as all local conditions are different–but it would work in Coweta.
This resolution is now in the hands of local legislators to approve or not. If they approve, it would allow local voters to consider the proposal in a November referendum, to take effect January 1, 2026 – the same time HB581 would have.
Often lost in the debate over this matter – and also absent from a February 21st Citizen editorial on this subject – are two pertinent facts.
First, the value cap of HB 581 has never, to date, been identified. Though often described as a 3 percent cap, or pegged to some variation of the Consumer Price Index, HB 581’s actual valuation cap on local property was deferred last year by the legislature. It has still not been set by state lawmakers.
So as citizens voted last November – by a completely understandable 63 percent majority – to establish a tax cap of some kind on rising property values, they have never been told what it would be. Neither were local governments and school boards, despite the same legislation requiring them to ‘opt in’ or ‘opt out’ by March 1st.
The proposal by our board seeks to actually set such a cap at 5 percent in Coweta, but also allow for expanded senior tax exemptions. Increases to current senior exemptions would not have been possible financially if we had opted in. The proposal also protects good schools locally.
Second, we know what the effects of various rate caps would be on local governments. A rate cap of any size on cities and counties would not affect their ability to secure revenue as determined by their local councils and commissions, since cities and counties do not receive state funding (with accompanying state funding formulas). And they, unlike local school systems, have no restrictions on where they may set local millage rates (a 20 mill cap for most school systems, but none for cities and counties) or build operational reserves. The state allows us to set aside up to 15 percent of operations as reserves if we manage local monies competently. We have 14 percent, which is the equivalent of about seven weeks of Coweta school operations. Our reserves also allow the school system to operate without borrowing costs.
The property value rate caps most often discussed for 581–3 percent or CPI – would have little or no effect on cities and counties, but would place most local school systems in a downward spiral of compounding revenue decreases, because state funding under the current state formula would decrease at a faster rate than local funding can adjust for. It is why not just Coweta, but Fayette and all metro school systems, and upwards of 90 percent of all Georgia school systems, are opting out. The actual effect of opting in at those rates is knowable, and it gradually strangles local school funding and local financial options for most Georgia school systems.
A max 5 percent rate, however–as proposed by Coweta’s school board–would not have the same crisis-inducing effect. It would protect homeowners. It would still reduce local system revenues significantly, but not as severely as alternate caps would. Even with expanded exemptions, 5 percent would allow the school system to manage schools and the local tax system sustainably in years to come.
The board has also proposed removing the cap on local millage, and moderately expanding allowable reserve balances. School board members have no intention of raising tax rates at this time, even though the initial effects of our local proposal will still cause significant initial revenue decreases. Instead, those changes would allow the school system some of the same flexibility enjoyed by cities and counties in the event that state funding for schools is further decreased. However, we believe that we can manage the school system budget in the same way that has allowed us to lower tax rates in four of the past five years (to the lowest rate in metro Atlanta) and still maintain an operational fund balance of some size.
Also significantly omitted in the February 21st editorial is the simple financial fact that HB 581 – if adopted by Coweta’s school board – would have also defunded the school board’s ability to expand senior tax exemptions, if 3 percent or CPI were to be adopted by the state. It would be bad for students and their schools, but also bad for senior homeowners.
We urge our legislators to support it and let local citizens decide.
Sincerely,
Buzz Glover, Chairman
Coweta County Board of Education
