Clarification of Our Millage Rate Adoption Process and Call for Reasonable Stop Gap for Your Property Taxes
Wow! We’ve been seeing quite a lot of incorrect and misleading information about Atlanta Public Schools’ millage rate related to Fulton County tax assessments.
First, Fulton County has made it clear that recent increases in the assessment of property values are due to under-assessments over the past several years. Second, APS and our Board have absolutely no involvement in the assessment of property values.
Here’s what the public school system and the Board actually does in relation to this issue:
When Atlanta Public Schools develops its general operating budget each year, a major source of revenue – about 70 percent – comes from local resources, mostly property taxes. Each year, the Atlanta Board of Education considers and sets a millage rate, which currently stands at 21.74, for ad valorem taxes due to the city school district.
Even when the millage rate stays constant, the value of the tax can rise or fall due to inflation or to changes in assessed value of property. State law requires our district each year to publish assessed taxable value of all property and also calculate a “rollback” millage rate when assessed values of property leads to a significant rise in property tax revenue.
When the Board approved the FY2018 General Fund Budget on Monday, June 5, it did so based primarily on information provided by the interim Fulton County Chief Appraiser to the APS Board Budget Commission at its March 16 meeting. He projected growth of between 5% and 7%. The adopted budget made the assumption of 6% growth in the overall tax digest with NO – I repeat, NO – increase to our millage rate.
Typically, we receive the preliminary tax digest numbers by late May or early June. To date, we still don’t have the official tax digest.
To go further, here’s how the District and the Atlanta Board of Education considers and sets the millage rate each fiscal year.
- District receives estimated consolidated tax digest from the Fulton County Tax Commissioner’s Office. Again, we do not have the actual tax digest in hand at this time.
- Our CFO and the APS Budget Department then calculate the rollback rate, which is equal to the previous year’s millage rate minus the millage equivalent of the total net assessed value added by reassessments.
- APS, under state law, provides certain disclosures to taxpayers prior to the establishment of the annual millage rate for ad valorem tax purposes. The first disclosure – which must be published – shows the assessed taxable value of all properties in the City of Atlanta, the proposed millage rate for the current calendar year, and the assessed taxable values and millage rates for each of the immediately preceding five calendar years. The second disclosure requires APS to compute a “rollback” millage rate, and if the proposed millage rate exceeds the “rollback” rate, the district must advertise a tax increase including the rate and hold public hearings before adopting a final millage rate.
The challenge with the FY2018 general fund budget was that our CFO and our budget team have no way to determine what share of the increase is related to new property assessments (which is not included in the rollback rate) and what is due to reassessments.
Additionally, this year’s tax digest will represent Fulton County’s effort to correct and right-size its previous assessments. While other counties have seen gradual increases over the years, Fulton County has not kept up. And that has nothing to do with APS.
This has meant, however, that APS, Fulton County Schools and municipalities in the county have struggled to balance budgets with increased costs and undervalued assessments. While the Board could have increased the millage rate to fund these rising costs, it hasn’t. What has happened: The Board has recommended to hold the rate constant.
The FY2018 budget includes yet another year of austerity planning (totaling $20 million over three years) including central office budget cuts to keep up with mandatory cost increases. These include: an $8 million increase in contributions to the Teacher Retirement System; a $1.5 million increase for unfunded pension obligations; a $1.3 million increase in health rates; and $6 million in support of a state-mandated cost-of-living adjustment for teachers and other employees.
Such costs are expected to go even higher for subsequent budgets. For example, we have already been notified that for FY2019 the APS contribution for TRS will increase an additional 4% or $16 million.
Regardless of all of these pressures, APS remains committed to children and schools, all the while working to redirect existing resources to pay for our Strategic Plan priorities, which include $32 million for the Turnaround Strategy and $21.8 million in cluster, flex and signature funds in support of the charter system model. With no rollback of the millage rate, the district may also be able to implement the remaining unfunded components of transformation for the upcoming year, meet unanticipated challenges (including additional growth in the charter school calculation), and offset the use of fund balance currently recommended to balance the FY2018 budget.
Again, APS has not set a millage rate yet and does not plan to increase it.
Finally, it is still as reasonable today as it was in March when the Interim Chief Appraiser advised the district on the projected growth rate of between 5 and 7 percent.
Freezing property assessments at tax year 2016 values – as the Board of Assessors is considering at its next regular meeting on Thursday, June 15 – will only exacerbate the need to correct and right-size across the city in the out years. Public agencies have mandatory costs that must be covered, and in a city like Atlanta that is seeing growth, there should be at least some corresponding new revenue to cover these costs.
Without it, it will lead to further decline in public services that a growing city like Atlanta needs, especially while it works through gross inequities and disparities for some of its residents.
It is our hope that our leaders and officials sort out a more balanced, more measured and more reasonable stop gap until all of this can be sorted out for all of our stakeholders.