The Atlanta school district could spend more than $200,000 to borrow money to cover a cash flow gap caused by Fulton County's delay in sending out tax bills.
Other local school districts and cities, fearing long delays in receiving local tax dollars, could soon follow suit.
Earlier this summer, Fulton County discovered an error in the way the county calculated property tax exemptions. Fixing the error has taken weeks, and means that tax bills will not be sent before mid-September, and payment would not be due until November, at the earliest.
On Monday, the Atlanta school board voted to authorize borrowing up to $175 million to cover payroll and other costs while it waits for Fulton County to send out tax bills and start collecting taxes.
Even borrowing less than that amount could cost the school district. A short-term loan of $75 million could cost about $269,000 in interest and administrative costs.
The final loan amount depends on when tax bills go out, school district Chief Financial Officer Robert Morales said. The loan will come before the board for final approval next month.
The tax dollars that will be spent on the short-term loan could otherwise be spent on teachers, counselors or other school services, Atlanta school board chairman Courtney English said.
“It is baffling to me that by no fault of our own we have a $269,000 burden that we have to account for,” he said. “That’s money that could and should be going to kids.”
Taking legal action to try to recover those costs is unlikely to be “cost-effective,” board lawyer Glenn Brock said in response to a question from board member Nancy Meister.
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