Fulton Schools blame tax exemptions for drop in revenues - North Atlanta Business Post
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Updated Nov 14 @ 1:05PM

Fulton Schools blame tax exemptions for drop in revenues

Millage rate hike is first for district since 2010


NORTH FULTON, Ga. – Fulton School System officials are raising questions about the increasing trend toward tax exemptions to lure businesses to the area, and the significant impact that loss of revenue may have on school operations.

Last week the Fulton School Board adopted a millage rate of 18.546 to fund the 2017-18 school system budget -- a .044 increase from last year’s millage rate. This was the first increase in millage in Fulton County since 2010, and was necessary to maintain a revenue-neutral budget, district officials said.

School officials were quick to point out the millage increase will bring in the same amount of revenue as last year.

Even with the millage hike, Fulton Schools still faces a $15 million shortfall in FY18. Those shortages will be made up in a number of ways, officials noted, including cuts to department budgets and withdrawals from the system’s healthy reserve funds.

Chief Financial Officer Robert Morales said the $1.5 billion budget for Fiscal Year 2018 was based on an expected 6 percent increase in property tax revenues provided to them by Fulton County tax officials last spring. Local tax revenue makes up more than 60 percent of the system’s operating budget.

“We have subsequently learned that revenue grew less than 3 percent,” said Morales. “Additionally we learned exemptions — which are deductions to revenue — grew by more than 17 percent because of [Fulton County] Development Authority (FCDA) decisions and free port exemptions.”

Those exemptions come in the form of tax abatements and other tax-reducing incentives offered to new and expanding businesses in Fulton County.

The free port exemption was the decision by Fulton County last year to give businesses a 100 percent tax exemption on all inventory and raw materials stored temporarily in the business.

“The school system depends on property taxes as its main source of revenue [and] if property taxes aren’t received then it’s a problem for us,” Morales said.

Al Nash, director of FCDA, countered the assertion that school systems are financially harmed by business incentives, pointing to a long list of studies that prove otherwise, including a recent report by Ernst and Young.

“What we are seeing is there are millions more dollars to the schools through [job creation] and direct and indirect [sources] than would have been collected without tax abatement,” said Nash.

He pointed to the Avalon development in Alpharetta which sat unused for many years, generating little tax revenue, until tax incentives spurred a developer to complete the highly profitable complex. That is only one example, he noted, of significant development encouraged by incentives.

“A piece of property may be on the tax rolls for $100,000 for years and someone comes in and does something that is now worth $20 million...that would not occur if not for tax abatement,” said Nash.

He said the free port exemption on inventory is standard practice in many states, and requires voter approval. Nash could not say how many counties in Georgia give businesses a 100 percent exemption, as Fulton County provides.

While jobs and businesses are vital, Alpharetta school board member Katie Reeves noted business growth goes hand in hand with school growth.

“Everyone likes new businesses,” said Reeves. “But new jobs come with new students, and those new students come with costs.”

Additionally, impact fees which developers pay to help offset increased demands for services do not flow to the school systems; a point which educators have long fought.

School Board member Gail Dean of Sandy Springs said she wants more transparency in how tax abatements are being used and the impact on school systems.

“I’m just curious if there is something we can do to hold [entities] accountable to ensure we are not giving away the store,” Dean said.

Superintendent Jeff Rose said he would push for more open communication between all parties; a move that was also supported by Nash of DAFC.

“We need to have face-to-face communication and let people know our priorities, and the impact [these issues] have on our local taxpayers and the impact on our schools,” Rose said.

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