Banks Proposes New Education Sales Tax

As the Cobb Board of Education heard some dire preliminary budget figures for fiscal year 2015 on Wednesday, one member has crafted a proposal designed to make it easier to get out of red ink.

Post 5 board member David Banks, who represents part of East Cobb, is advocating a constitutional amendment that would permit school districts in Georgia to collect a new penny on the dollar tax.

In return, property tax rates would be rolled back partially. 

The new sales tax would be in addition to the Education SPLOST that funds Cobb school construction and maintenance projects. Cobb voters extended that tax in March, with $717 million to be collected from 2014-2018.

During a school board work session Wednesday morning, Brad Johnson, the chief financial officer for the Cobb County School District, projected a $79 million deficit for fiscal year 2015.

While that's a very preliminary figure -- the board doesn't adopt a budget until the spring -- the number isn't far off the $86.4 million gap that had to be closed for the fiscal year 2014 budget, which took effect July 1.

Banks estimates a penny sales tax could bring in around $120 million for Cob, more than enough to offset long-term budget deficit estimates and compensate for the lack of full funding district is entitled to under the Quality Basic Education Act.

The property tax rollback against that amount could come in around $36 million, according to a calculation in The Atlanta Journal-Constitution. The net benefit: that $84 million that proved to be the margin of the most recent deficit.

The Local Education Sales Tax (LEST) proposal was drafted by former East Cobb school board member John Crooks, now a member of the board's SPLOST oversight panel, and former Cobb GOP chairman Don Hill, according to The Marietta Daily Journal. 

More details of Banks' proposal are yet to be worked out, but it comes as the board got a sneak preview of the the FY 2015 budget process at the request of chairman Randy Scamihorn. 

Johnson is estimating revenues of $818 million (down from the $856.3 million current adopted budget) against expenses of $897 million.

He is assuming no furloughs (which the school board has imposed the last two years), full "STEP" salary increases for employees (reduced in half for this year), an increase of $5 million in rising health insurance costs and tax digest growth of zero (it dropped 2.3 percent this year).

"All things are subject to change," said Johnson, who added a better estimate won't come until after the Georgia General Assembly session begins early next year.

"It's very hard to do a detailed forecast at this point."

The school board borrowed nearly $45 million from its fund balance for the current fiscal year, leaving around $74 million, close to the $71 million threshold he advised the board not to break.

At the end of Wednesday's day-long work session, the board debated the sales tax proposal at length. 

Banks said LEST is not a tax increase, but a "tool" for school districts to use, and that the amendment has sunset provisions, like SPLOST. 

"The voter makes the final decision," he said.

"As a Republican and as a conservative, I will not support another tax," said Northeast Cobb member Kathleen Angelucci. "We can't be Santa Claus."

Scamihorn, also a Republican from North Cobb, said he sympathized, then posed a question that appears to have no answer for the moment: 

"We're taking on water. Does anybody have any more buckets?"