Mayor, schools at odds over penny

A potential showdown between Atlanta Mayor Kasim Reed and Atlanta Public Schools over a penny in sales tax could jeopardize nearly $1.5 billion worth of school construction, maintenance and technology for the city and surrounding school systems, including Fulton and DeKalb counties.

In an interview with The Atlanta Journal-Constitution, Reed said the penny — which over nearly 15 years has helped build or renovate 84 city schools or other buildings, among other projects — instead needs to go to a regional transportation plan expected to be put to voters next year.

The penny is in play because it expires next year. Reed doesn’t want the city school system to seek to renew it as voters also consider the transportation tax. If both were to pass, the city would have the state’s highest sales tax at 9 percent and would be at a competitive disadvantage, the mayor said.

“Obviously, I’m very concerned about renewing the 1 percent sales tax in the city [for education] and then adding another penny,” Reed said.

The showdown looms as the city’s school board must decide whether to join with Fulton, DeKalb and the city of Decatur to ask voters to continue using the 1-cent-on-the-dollar sales tax to fund capital needs. The tax started in 1997 and has been renewed twice. The three other systems, which all want the sales tax to continue, cannot seek a referendum to do that without Atlanta schools’ participation.

Atlanta School Superintendent Beverly Hall made clear this week in discussions with the school board that she wants to pursue the full penny to fund $513 million worth of needs, including a new high school and elementary school in the Buckhead area, and a new middle school for the Midtown area.

Fulton says reduced revenue from the current SPLOST has already forced it to defer projects, including a middle school on the north and one on south end of the county, into the next round of SPLOST funding.

Decatur schools have not settled on a list of specific projects, but plan to ask voters for a five-year extension, spokesman Bruce Roaden said.

Reed’s solution is for the Atlanta system to, at most, pursue “some sort of fractional tax” that, when combined with a presumed penny transportation tax, would keep the city’s overall sales tax rate competitive with Charlotte’s 8.46 percent.

“I think everyone in Atlanta is comfortable with paying and funding the school improvements that are essential so that everyone receives their benefits. That’s what was promised. Clearly, we have not finished that commitment in terms [of enrollment growth in] Buckhead, and that needs to be achieved.”

Reed said financial models show the Buckhead school construction can be done “comfortably” with an 8.2 percent sales tax rate, including the 1 percent for regional transportation.

“Then there is a significant push that I support to have funding for arts and culture,” the mayor said. “That would put us at about 8.4.”

Hall said she hasn’t had any discussions about a fractional sales tax.

“I’ve heard through the grapevine that was out there,” she said of Reed’s idea. But “what we’re asking for is approximately 50 percent of what we need.”

Reed said he believes “there is a strong enough motivation, certainly within the buisness community, to support what is a fair compromise. But I don’t believe a fair compromise is to simply commit to another one penny when we’ve rebuilt every school or modernized every school in the system,” he said.

Atlanta, Decatur, Fulton and DeKalb have used the SPLOST, or special-purpose local option sales tax, to build and renovate dozens of new and existing schools, buy thousands of computers, laptops and whiteboards, and replace or repair roofs and heating and air conditioning systems.

The systems must seek the SPLOST together because of shared borders and contiguous boundary lines.

Voters for more than a decade have approved three separate referenda to use the sales tax to pay a combined $4.5 billion for school needs. Alternatives include raising property taxes or taking out debt through bonds.

Fulton, DeKalb, and Decatur have all signaled they want a referendum to extend the SPLOST, but under the current interpretation of state law, they need Atlanta schools to join in.

Reed said he’d support legislation to “decouple” the systems, but such legislation has yet to be introduced.

The other systems, meanwhile, have been left to look on in frustration.

“The greatest concern is going to be that ... all the large major school systems are relying on this,” said Tom Bowen, chairman of the DeKalb County Board of Education, referring to the sales tax. “It’s built into the long-term planning.”

Cindy Loe, superintendent in Fulton County, expressed similar feelings.

“It is critically important to us that we continue to have the option of the SPLOST,” Loe said. “We don’t have that kind of money in the general fund. We never did.”

The Fulton system’s current SPLOST was expected to raise $900 million, but, with the economy and spending down, it’s now projected to bring in only about $600 million, Loe said. The system has about $1 billion in capital needs, she said.

Decatur’s school system nets $2 million to $2.5 million from its SPLOST and, with the current one, built a gym at Renfroe Middle School and a science lab and a gym and auditorium at Decatur High School, Roaden said.

Without a sales tax extension, money would have to come from general funds or other sources, Roaden said.