Representative Mike Jacobs

Tax allocation districts, or TADs for short, have become a popular infrastructure financing mechanism for Georgia’s county and city governments.

A TAD relies on the annual property tax increases which result from year-to-year increases in assessed property values.  These annual property tax increases from properties located inside a TAD are captured and applied to infrastructure improvements such as roads, sidewalks, sewer lines, and parks within the boundaries of the TAD.

Originally, TADs were used as an incentive to attract developers to redevelop blighted or economically distressed areas.  Such property does not have much value in the first place.  Thus, the county or city gives up some of the early increases in tax revenues to help improve blighted or economically distressed areas and attract development into these areas.  The benefit is that the county or city receives significantly improved tax revenues later, after the blighted or economically distressed areas have been improved and property values have increased.  Atlantic Station and the BeltLine are examples.

Some local governments have gone hog wild with TADs, using them in areas that are not blighted or economically distressed, and using them to subsidize new development where new development would occur anyway.  Personally, I believe that the North Druid Hills and Briarcliff TAD, an area where the median home sale price is greater than $410,000, falls into this category.

Another problem with a tax allocation district is that, if the board of education consents, the annual increases in school property taxes that result from year-to-year increases in assessed property values can be applied to infrastructure improvements inside the TAD.

School taxes are paid for educational purposes, and are not paid to subsidize new infrastructure and development projects, however meritorious these projects might be.  If not used for educational purposes, there is a compelling argument that school taxes should not be collected in the first place.  County and city governments already receive their share of our tax dollars to fund infrastructure improvements, after all.

In a unanimous decision handed down last month, the Georgia Supreme Court agreed.  The Court found that the use of education taxes for TAD infrastructure projects violates the Educational Purpose Clause of the Georgia Constitution, which provides as follows:  “School tax funds shall be expended only for the support and maintenance of public schools, public vocational-technical schools, public education, and activities necessary and incidental thereto, including school lunch purposes.”

I believe the Supreme Court got it right.  However, efforts are afoot in this year’s General Assembly to overturn this decision of the Supreme Court by amending the Georgia Constitution.  I do not support these efforts, and have co-sponsored House Bill 1215 to remove all references to education taxes from the law that created TADs.

Taxpayers deserve truth in taxation.  We deserve to know our school taxes will be used for educational purposes.  Otherwise, we deserve our money back.

A version of this post was published in the February 27 edition of the Dunwoody Crier.