Cobb County voters Tuesday approved a five year extension of the Education Special Purpose Local Option Sales Tax, the penny sales tax it has used to build 28 new schools and more than 2,700 new classrooms since it was first approved in 1998. Cobb benefits from the tax in part because its commercial districts draw shoppers - and their sales taxes - away from its neighbors.
Georgia State University professors Ross Rubenstein and Nicholas Warner call this phenomenon "tax exporting." It happens when shoppers in rural districts or counties with less commercial development travel to do their shopping, which means the sales taxes they pay go to another school district.
As a result, retail hubs get more tax revenue for schools while rural districts earn just enough to maintain decades-old buildings. The professors suggest that Georgia consider tax-sharing plans like North Carolina’s to make money for schools more equitable, but doing so would be politically difficult.
On average, metro Atlanta school districts collected six times more tax revenue in 2015 than their neighbors, a difference of $400 per student, according to tax data the pair analyzed. Fulton County led the state in ESPLOST earnings with $163 million, and all of metro Atlanta’s six districts were among the top seven earners in the state.
The metro area’s concentration of retail centers led to several large disparities. For example, Cobb County collected $122 million more than bordering Paulding County, which equated to $600 more per student. Atlanta Public Schools collected on average $1,801 per student in 2014-15, compared to the state’s lowest performer near Valdosta, Echols County, which collected $130 per student.
This wide gap in tax revenue is common across the state. Like Paulding, Crawford County is disadvantaged by its location, Superintendent Brent Lowe said.
“We don’t have much industry here,” said Lowe. “Our people work out of town and do most of their shopping out of town.”
Crawford County is next to Bibb County, home to Macon. In 2015, Bibb collected almost $30 million through the sales tax, while Crawford collected less than $600,000, Georgia Tax Center data shows. In dollars per student, Bibb took in nearly four times more than Crawford. More than 70 percent of Bibb’s sales tax revenue came from non-residents, the Georgia Tech Research Institute found.
Bibb has used the tax revenue to build 15 new schools, purchase athletic equipment, improve its technology infrastructure and upgrade its security since enacting the tax in 2000 and renewing it every five years. Crawford, on the hand, uses its revenue to maintain its aging buildings.
“The need would have to be astronomical for us to build something new,” said Lowe. “Our buildings would have to be unsafe, and they’re not.”
Crawford County High School was built in the 1970s, but it would take more than 20 years of revenue from its ESPLOST to build a new high school, Lowe said. Despite its meager earnings, Lowe hopes local voters continue to renew the tax, which state law mandates must be approved every five years.
Crawford’s story is echoed around all of Georgia’s major cities. Muscogee County, home to Columbus, collected almost 10 times more tax revenue than its three neighboring counties combined. Lowndes County, home to Valdosta, collected about $1,150 per student, while next door Echols County collected just $130 per student, the least of any district in Georgia. Chatham County, home to Savannah, collected almost 12 times more than Bryan County and 8 times more than Effingham County, its neighbors.
The GSU professors believe a tax-sharing plan would “help break the link between the quality of a district’s school facilities and the happenstance of retail locations.” One option would be for the state to create regions in which revenue from the tax is shared.
“If somebody in a rural, south Georgia county consistently travels to the county next door to shop, then it probably does make sense for that county to share some of that sales tax revenue,” said Rubenstein, the Dan E. Sweat Distinguished Chair in Educational and Community Policy at GSU.
Alternatively, the state could collect every district’s tax revenue into one pool and redistribute it across the state like North Carolina. It distributes the revenue based on population.
“Both would help if enacted,” said Warner, the study’s co-author. “We weren’t saying one would be better than the other or one would solve the problem.”
The General Assembly is in session and has new education bills that would address everything from failing schools to recess, but no bill that would enable ESPLOST sharing. State Sen. Ellis Black, R-Valdosta, believes that the fairest system would be to collect the tax statewide and redistribute it according to need, but he does not believe that is likely to happen because legislators from major cities must be willing to give up some of their districts' revenue.
“Folks are more into protecting their areas,” he said. “We couldn’t do anything without considerable commitment from the governor, and even for him it would be hard.”
Rubenstein said, “It’s not hard to guess about who would likely lose some of their money and who would likely gain some money. Politically, anytime you’re talking about winners and losers, that’s going to make it much more difficult to sell.”
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