Critics say the abatement will cost the school board $4.3 million in lost tax revenues. The school board, don’t forget, is already trying to figure out how to deal with a $79 million revenue shortfall for next year’s budget.
The school board met Tuesday to discuss the abatement and a compromise offer from the DACC last week that would provide $139,299 in property taxes to the board during the three-year construction period for Riverwalk. Developers receiving abatements usually do not have to pay property taxes on land while it is being developed. The board also discussed the “communications policy” passed Friday by the Development Authority that specifies it should alert the school board of pending tax abatement applications.
Williams and DACC Chairman Clark Hungerford have warned that Williams will build elsewhere if his abatement request is rejected. As Williams put it bluntly at the board meeting, the project won’t happen without the subsidy, “pure and simple.”
Imagine being able to have free, legal access to your neighbor’s wallet and sharing its contents with whomever you please — and without any obligation to tell him you are doing so. And without him being able to do anything about it, even after he finds out about it.
It’s a pretty sweet deal — for you. But for your neighbor, not so much.
And that’s a pretty fair analogy for the current relationship between the Development Authority and the school board. The board filed a formal objection in Cobb Superior Court in December in a last-minute effort to block the Authority from issuing the bonds. It argues that:
- the Authority cannot give away the Board’s right of taxation;
- the tax incentive represents a “gratuitous gift of public funds”;
- the Authority lacks policies; spelling out its review/approval process for such incentives; and
- the Authority lacks any means of ensuring the proposed incentive will in fact result in the benefit to the public promised by the developer.
The Authority had expected the Dec. 17 bond validation hearing before Senior Judge Mike Stoddard to be a formality. But in the wake of the board’s objection the judge continued the case until after Christmas.
The bond validation hearing is expected to resume on Friday, but the school board now is expected to ask the judge for another extension so it can clarify details of the Authority’s “compromise.”
In addition to the objections cited by the school board, there is the underlying question of whether the law giving the Authority the power to grant such incentives is constitutional. Should the unelected Authority board be able to issue tax incentives without the explicit approval of its parent board, the Cobb Commission, as is now the case? And should the Authority be able to usurp the tax-collection powers of the school board, as is apparently now the case?
“I believe local school boards are given the authority to collect taxes for the local Board of Education, and I’m not sure an authority that they have no appointment to or no hand in appointing or no input into the process can take over their constitutional authority to collect taxes,” state Sen. (and former Cobb School Board Chair) Lindsey Tippins (R-west Cobb), has said.
Economic development is vital, yes — but not if it comes at the expense of local education. Ten years’ worth of tax abatements translate into 10 years’ worth of local schoolchildren having to do with less — and/or 10 years’ worth of higher taxes for everyone else to make up the difference.
We suspect Lee and other commissioners would strongly object if the school board could hijack a hefty portion of future county tax revenues and steer them instead to school coffers.
The school board has no representation at present on the DACC, the members of which are appointed by the county commission. It deserves such representation, although we’re not sure that adding one or two school board members to the Authority would do much to protect the school budget because they would lack the voting strength to fend off the rest of the Authority board.
The best solution would be to improve the law and allow for school board representation on the Authority — and more important, require the Authority to gain the approval of both the county commission and the school board before handing out any tax incentives. In matters involving tax dollars, the buck should stop with elected officials. That way, a majority of the public can hold officials accountable by way of the ballot box. It’s not right that an unelected, unaccountable board like the Authority should have the unchecked power to issue bonds and hand out tax breaks — especially when the tax dollars it’s giving away are not entirely the Authority’s to give away.
The Cobb legislative delegation should make improving that law a priority in the coming legislative session. And there should be a moratorium on considering any further incentive requests until such changes are made.
In the meantime, the public’s education about the good and the bad of tax incentives continues …