Property tax tug-of-war: Why relief for homeowners could squeeze classrooms

As the Nov. 3 midterm elections approach, politicians from Georgia to Texas to Vermont have promised to slash property taxes.

However, the pledge is butting up against school districts, some of which are considering hiking millage rates to shore up their budgets. The Fulton County school district has scheduled two public hearings this month to discuss a proposed property tax increase. Clayton County’s school board raised its millage rate this year.

Property tax rates have risen faster than the rate of inflation in the last few years. According to an Atlanta Journal-Constitution analysis, median property tax bills have increased 20% or more in 117 of Georgia’s 159 counties in recent years. Metro Atlanta counties, such as Clayton and Rockdale, have seen spikes of more than 50%.

As a result, state lawmakers introduced several bills in 2026 that would’ve reduced or eventually eliminated property taxes. The problem is that several public school districts get the bulk of their revenue from property taxes, and experts say officials don’t have many options to replace that money.

Swapping one tax for another

Elected leaders who want to cut property taxes often propose raising other taxes, such as sales taxes, to make up the money.

But Janelle Fritts, a senior policy adviser at Washington, D.C.-based nonprofit Tax Foundation, said that can backfire. For one, Fritts said, consumers can change their behavior if sales taxes are too high.

“Maybe someone goes shopping in a different district, and thus you’re still not getting the revenue that you want,” she said.

Raising sales taxes could also fall flat in bedroom communities, Fritts said, where there’s a lot of residential property but few retail stores.

“Maybe there’s not a shopping mall; maybe there’s not a lot of gas stations,” she said. “They’re just not going to bring in as much from the sales tax, so they need to have a really, really high (sales tax) rate in order to make up for the property tax.”

Despite a recent rise in property tax revenue due to increased home values, school districts aren’t awash in extra money. They’re faced with climbing costs and declining enrollment, with few options for bringing in new funding.

“The only tax source that school systems can use to fund operations is the property tax,” said David Sjoquist, an emeritus professor of economics at Georgia State University.

If property taxes are frozen or eliminated, Sjoquist said, most school districts are stuck. Some have special local option sales taxes, but that money is earmarked for capital projects or debt repayment. Other revenue streams, such as charging tuition to students who reside outside of the school district or renting out unused buildings, bring in much less revenue, he said.

“They’re selling wrapping paper; that’s what it comes down to,” Sjoquist said. “They’re not allowed to levy any other tax. They can’t levy any other sales tax. They can’t do an income tax. They can’t do other excise taxes.”

As property taxes have soared in recent years, politicians have campaigned on promises to freeze, reduce or eliminate them. Fritts says it’s easy to target property taxes because homeowners know exactly how much they’ve paid from year to year.

“Whereas maybe (with) the sales tax, they’re not going to (know how much they’ve paid in a year),” she said.

In Texas, Gov. Greg Abbott says school district property taxes are the largest portion of homeowners’ tax bills, and he wants voters to decide whether to abolish school district taxes.

“Despite record property tax relief provided by the state, local government tax increases have wiped out billions in savings for homeowners,” Abbott, a Republican, says on his campaign website. “More must be done to rein in out-of-control property taxes.”

In Georgia, Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, has said there are mechanisms school districts can use to make up the lost revenue.

“They can still increase the millage rate, and the majority of property, which is not homeowner property, can still go up unchecked,” he said on the Senate floor during the 2026 legislative session.

A hard sell

Although school districts can raise their millage rates, it’s not a politically popular move.

The Clayton County school board recently approved a millage rate increase of .4 mils this year, raising the rate from 19.6 mils to 20. Superintendent Douglas Hendrix said the district cut $10 million from the budget first.

“We have reduced budgets, tightened spending, examined staffing and positions, reconsidered resources, and looked throughout the district for savings,” Hendrix said in a video message to families. “We will continue doing so … but there comes a point when cutting more means giving children less — fewer resources, fewer opportunities, deferred maintenance, and eventually slower progress.”

Clayton officials estimate the increase will add $36 in property taxes for a home valued at $250,000. Homeowners should receive their bills in December.

Fulton County Schools is considering raising its millage rate one mil, from 17.08 to 18.08. The district estimates that would result in a property tax increase of about $98 for a home valued at $250,000.

“This recommendation is about more than a single year,” said the school district’s Chief Financial Officer Marvin Dereef. “It is about maintaining the reserve standard adopted by the board, limiting repeated deficit spending and protecting the district’s ability to serve students through changing economic conditions.”

Homestead exemptions also pose a challenge for school districts. State lawmakers recently passed a bill creating an exemption that caps increases in taxable value on single-family homes at the rate of inflation. Originally, local municipalities could opt out, and many did, but Republican lawmakers amended the law so school districts and local governments are required to offer the exemption. In addition, several counties offer property tax exemptions for senior citizens.

Fritts says when counties offer multiple exemptions for some people, the base tax rate increases for everyone else. She says even if retirees don’t have kids in school anymore, they still benefit from living in neighborhoods with good schools.