Hosted by the Superintendent’s Council of Community Advisors

1. Hosted by the Superintendent’s Council of Community Advisors January 15, 2008 Parkview High School

2. Meeting Agenda WelcomeB.E. (Woody) Woodruff, SCCA Chair Tax Reform Moderator: Rebecca Branstetter, Gwinnett PTA Council Legislative Chair - Overview of Tax Reform Initiatives - Panel - Questions from the Audience Education-Related LegislationAngela Palm, Director of Policy, Georgia School Boards Association GO BondMike Levengood, Citizens Campaign Chairman Wrap-up/DismissalMr. Woodruff

3. Tax Reform Moderator: Rebecca Branstetter, Gwinnett PTA Council Legislative Chair - Overview of Tax Reform Initiatives: Rick Cost, CFO - Panel - Questions from the Audience

4. Overview of Tax Reform Initiatives Rick Cost, Chief Financial Officer, Gwinnett County Public Schools

5. HR 900 – The GREAT Plan • Calls for amendment to the Georgia Constitution granting the General Assembly authority to abolish: • all property taxes for education • ad valorem taxes on personal vehicles • Requires two-thirds approval in House and Senate, plus voter approval in November 2008 referendum

6. Enabling Legislation – The GREAT Plan • Puts provisions of the HR 900 Constitutional amendment into law • Initially applies to residential property taxes and motor vehicles only • Local board sets M&O millage rate but taxes are not collected locally • State sends the local system the amount of money that would have been generated by the M&O millage levied on homes and motor vehicles • Funds would come from adding 4% sales tax to groceries and taxing “retail services” at 4%

7. Enabling Legislation – The GREAT Plan • Names retail services to be taxed at 4% (pet care, legal fees, insurance, auto repairs, cleaning & yard services, trash pick-up, pest control, haircuts, HOA dues, utilities, lottery & amusement tickets, etc.) • Provides low-income citizens an income tax “credit” for food expenses based on their earnings in relation to the federal poverty level • Expands opportunity for appealing assessments • Gives future legislatures the power to do away with school taxes on commercial and retail property as well, with simple majority vote

8. Senate Resolution –Assessment Freeze & Revenue Cap • Calls for amendment to the Georgia Constitution • Sets property values for homes at 2007 levels statewide • States that a home’s assessed value cannot change by more than 1% a year unless it is sold; when sold, the purchase price becomes the assessed value • Caps property tax revenue for schools, counties, & cities at US Price Index for Government Consumption

9. Panel Members • Alan Essig, Director, Georgia Budget and Policy Institute • Dr. Robert McClure, District IVSchool Board Representative • Rick Cost, Chief Financial Officer, GCPS • J. Alvin Wilbanks, CEO/Superintendent

10. TAX REFORM & EDUCATIONJanuary 2008Alan Essig, DirectorSarah Beth Gehl, Deputy DirectorGeorgia Budget and Policy Institute

11. Healthy economic growth depends on adequate, sustainable funding. • Over 3/4ths of the state budget is spent on education, healthcare, and criminal justice. • Almost 3/4ths of combined local government spending across the state is on education, public safety, and health.

13. Tax reform discussions need to get beyond politics and special interests and focus on advancing opportunity for Georgians. Does tax reform build on strengths and correct weaknesses of current system? Adequacy: Is tax reform linked to budget needs? Fairness: Who are winners and losers? Local Control:Is local decision making strengthened or weakened?

14. Adequacy: Is Tax Reform Linked to Needs? • Will this tax reform pay for the regular growth of public services? • Examples of statewide costs: • 3% pay raise for teachers and state employees = $300 million annually • New K-12 and university students = $317 million annually • Will this tax reform meet the unmet long-term needs of our state and community? • Examples of long-term costs: • Unmet transportation needs = $7.7 billion over 6 years • Healthcare benefits for retired public employees = $15 billion over 20 years

15. Fairness: Who are the Winners and Losers?

16. GREAT PLAN Tax Reform or Tax Swap? HR 900 • Eliminate homestead property tax for education. • Eliminate property tax on personal motor vehicles. • School districts and local governments receive lost property tax revenue from state. • Low Income Credit Against Grocery Tax Additional House Legislation • Institute state sales tax (4%) on: • Consumer services • Lottery tickets • Groceries

17. GREAT PLAN Tax Reform or Tax Swap? Senate Legislation • Cap increase in property tax revenues • Local property tax revenues may only increase as fast as growth in population plus government inflation. • Local referendum required to go above cap. • Freeze value for Homesteads • Homesteads frozen at 2007 values for tax purposes. • Homesteads values for tax purposes may only increase by 1% per year. • Values reset at fair market value when property sold.

18. Major Issues: Great Plan • Adequacy ::Does the Math Work?No! • Need approximately $2 billion to replace homestead education and personal motor vehicle property tax. • Institute state sales tax on consumer services, groceries, and lottery tickets will raise approximately $1.3 billion. Constitutional Amendment should not be a guessing game!! Great Plan extremely risky. • Independent analysis on fiscal impact must be performed to assure adequacy in funding.

19. Major Issues: Great Plan • Fairness::Who are winners and losers? • This is a tax shift. Low and moderate income pay more while upper income pay less. • Elderly who do not currently pay education property tax will pay more. • Renters will pay more. • Homeowners who itemize will lose federal income tax deduction.

20. Major Issues: Great Plan • Local Control :: Is local decision making strengthened or weakened? • Arbitrary property tax and assessment caps are unrelated to needs and wishes of local communities. • Local communities have different issues and different values. • Should decisions on funding services that address those issues and values be left at local level?

21. Major Issues: Great Plan • Education Funding :: Will state funding for education be adequate? • Current funding formula still facing austerity cuts. • IE2 Commission expected to recommend increased funding. • Studies have shown that state aid to localities decreases over time especially during economic downturns.

22. Comprehensive Tax Reform: A More Balanced Approach A balanced state and local tax system relies on sales, property, and income taxes

23. Property Tax: Circuit Breaker Example • Mary and Sam are homeowners earning $40,000 in household income • They paid $2,500 (6.25% of their income) in local property taxes • Due to statewide 3.5% circuit breaker, they will receive a refund from the state of $1,100

24. Contact Information Alan Essig, Director Sarah Beth Gehl, Deputy Director 100 Edgewood Ave Suite 950 Atlanta, GA 30303 404-420-1324 ext. 102 www.GBPI.org AESSIG@GBPI.ORG SBGEHL@GBPI. ORG

25. Panel Members • Alan Essig, Director, Georgia Budget and Policy Institute • Dr. Robert McClure, District IVSchool Board Representative • Rick Cost, Chief Financial Officer, GCPS • J. Alvin Wilbanks, CEO/Superintendent

26. Education-Related LegislationAngela Palm, GSBA • IE2 Partnership Contracts • The BRIDGE Bill (HB 905) • Charter Schools Commission Bill (HB 881)

27. General Obligation Bond ReferendumFebruary 5, 2008

28. GO Bond ReferendumFebruary 5, 2008 What General Obligation Bonds will fund: • 8 new schools • 10 school additions • A total of 520 new classrooms • Technology upgrades that will improve instruction, provide upgrades for elementary schools, and enhance communication between the home and the school • Land for future schools • Infrastructure improvements systemwideNew classrooms, fewer trailers, no new taxes!

29. Call to Action! • Become well-informed on critical education issues. • Let your legislators know what you think. • Follow the action in the Georgia General Assembly. • Remember to vote on February 5.Thank you for attending tonight’s meeting!