Robb Pitts (left), chairman of Fulton County Board of Commissioners, celebrates with Meria Carstarphen, superintendent of Atlanta Public Schools, and Jeff Rose (right), superintendent of Fulton County Schools, after a judge ruled on Aug. 14 that Fulton County could collect tax money. HYOSUB SHIN / HSHIN@AJC.COM

Tax delay could cost Fulton schools, APS up to $1 million

Fulton County tax-collection delays could require the two school districts who rely on that money to take out short-term loans costing up to $1 million combined in interest and fees.

The Fulton County school board gave preliminary approval Thursday to take out a short-term loan of up to $70 million if additional delays in mailing tax bills cause a “cash crisis.”

If the district ends up borrowing that amount, it would have to pay an estimated $296,000 in interest and fees.

The Atlanta school board already began the approval process for a loan of up to $175 million to cover expenses while the district waits for taxes to be collected. District officials expect to borrow less than the full amount, which would cost Atlanta Public Schools an estimated $700,000 in interest and fees.

Fulton County taxes generate roughly two thirds of both school districts’ operating budgets, which means that lags in receiving that money strain their ability to pay bills and employees.

The county has not mailed tax bills yet because the high number of property value appeals required officials to first obtain a court order allowing them to collect taxes. A judge granted that permission earlier this week.

The Fulton County officials have said they aim to mail bills by Aug. 31.

Atlanta school taxpayers have 45 days to pay their taxes. Fulton County school taxpayers have 60 days — or a due date of Oct. 31 — if that timeline holds.

If issues pop up, the bills could be delayed until mid-September.

“Based on our current cash balance and monthly expenditures, any additional delay in tax billing could significantly impact our ability to meet payroll and pay vendors timely as early as November,” state Fulton County Schools documents.

To prepare for the possibility, the school board on Thursday gave preliminary approval to allow the district to borrow up to $70 million should it face a “potential cash crisis,” according to board documents.

The loan will be taken out only if needed, said Robert Morales, Fulton County Schools chief financial officer.

Tax-collection uncertainties have become a familiar, if unpleasant, problem for the school districts.

Last year, Fulton County tax bills weren’t mailed until November because the state Department of Revenue rejected the county’s tax digest, requiring the county to head to court and get permission to send bills.

Fulton County Schools limped along without borrowing money by freezing spending and hiring for the final months of 2017.

This would be the third straight year APS has had to borrow money to cover expenses while it waits for tax money. Last year, in addition to borrowing $100 million  at an estimated cost of $400,000 in interest and fees, the district had to furlough about 1,200 employees, freeze spending and make other cost-saving moves.

The school districts would have to repay any loans taken out this year by Dec. 31.

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