Sales taxes or property taxes? What gives in Georgia?

Previously, I stated that Peachtree City Mayor Kim Learnard had proposed a LOST or Local Option sales tax. That was incorrect. I was remembering an article she submitted to The Citizen regarding a recent town hall regarding HB 581. In this article, the mayor did an excellent job of explaining the options and ramifications of HB 581. Unfortunately, I read too much into the article, the mayor has clarified and does not propose or support a flexible sales tax solution provided under HB581. I apologize for the error. Mayor Learnard on HB581 and the recent Town Hall | The Citizen

The point in my column was not that the mayor did or did not support a sales tax offset for HB 581 but rather that the mayors and county commissioners were given an option that was denied to the school boards. That option was to limit property tax growth under HB 581 and offset some revenue loss by adopting an optional sales tax up to one cent.

In a subsequent conversation the mayor pointed out that the governments prefer the stability of a property tax because an optional sales tax would be subject to a vote by taxpayers to adopt and then renew every few years. If a government body chooses the optional sales tax to fund operations as allowed in HB 581, they could lose significant funds if the taxpayers denied a renewal.  While I agree with the premise, the reality is such a vote would give the taxpayers a way to hold their government accountable for their spending. 

In 2012, while working a project in Mobile Alabama I got to see this concept up close as Alabama public education has significant funding from sales taxes instead of property taxes. In this case, Baldwin County had one cent up for vote. At the time, Baldwin County was similar in educational stature in Alabama as Fayette County is in Georgia. The area was still staggering from the aftermath of Hurricane Katrina, and some suggested the schools “do with less”.

Dr. Alan Lee, Baldwin County’s Superintendent went on local television and spelled out what would be cut to fill the gap. The public weighed the options, went to the polls, and funded Baldwin County’s schools with an overwhelming renewal of the sales tax. As an aside, when Dr. Lee was appointed in 2010, the other finalist for that job was Dr. Jeff Bearden who later became Fayette’s superintendent.

Unfortunately, the Georgia legislature oddly chose not to give the school systems the option to provide property tax relief but also use other methods to fund operations. I had previously written that one option is to use part of a new but not additional ESPLOST. In this manner, it is the same penny, but now part would be used for teachers instead of tennis courts and aquatic centers. Fayette at crossroads for continued adequate funding for its excellent school system | The Citizen

Fayette’s schools are already showing revenue strain as the voters were given the option to limit property tax growth in 2020, which has reduced available revenue to offset growth in state driven costs such as salaries, benefits, and retirement costs. Last year, the FCBOE was forced to tighten school staffing and may have to again this year. Mr. Tom Grey presented a great overview of the challenges at January’s BOE meeting (attached). 

While some spending choices are optional, many choices for salary, benefits and retirement are made by the state and must be “purchased” by the school systems. Thus, any increase charged must be paid. Therefore, the politicians in the cities, counties, and school systems prefer the regular and reliable property tax which must be paid and cannot be avoided. 

However, the growth in property value does not generate a dime in extra income for the taxpayer and must be taken from somewhere else in the household budget to pay for ever increasing taxes. That is why taxpayers voted overwhelmingly for HB581 to limit taxes on unrealized property gains.  However, a sales tax component should be a better gauge on whether the taxpayer has the ability to pay, as the tax is driven by actual cash spend. 

Fortunately for us property owners, the entire Georgia Legislature, as well as many municipal leaders will be up for election in 2026. Many of these leaders seek credit for offering the illusion of property tax relief in a Constitutional Amendment to the Georgia Constitution, to only have a blame shifting discussion due to opting out. 

 For me and my family, hearing the candidates views on financing further cost growth is definitely a driving factor in determining who we will vote for. But we will be looking for honest solutions instead of more empty slogans. As a community, have come to the point where we need leaders who will make tough choices to represent property owners and reform a broken system.