Realigning Georgia’s Fiscal Priorities

By Kelly McCutchen

Fifteen years ago it was almost impossible to drive by a public school in Georgia without seeing at least one classroom trailer in the parking lot. Parents viewed those trailers as a threat to their children’s education, so in 1996 voters approved E-SPLOST – the special purpose local option sales tax for education that has funded hundreds of new schools and improvements to existing schools.

Today, Georgia is in a much different landscape than in 1996. The migration of new residents to the state has slowed and, with few exceptions, school facilities are now more on par with needs. Today, the challenge is to get to the new and improved schools on time: We’re stuck in traffic. To help the state’s economy stay competitive, Georgians now must address traffic congestion. And the solution could be found in those dollars that have been allocated to school construction.

The E-SPLOST has essentially become a statewide sales tax. It is levied at 1 percent in all but one of Georgia’s 159 counties. The $1.5 billion the E-SPLOST raises annually is nearly identical to the targeted dollars for transportation improvements – the transportation sales tax, or T-SPLOST – that Georgia voters will be asked to approve next year. It isn’t likely that a major tax increase in the middle of the worst economic recession in recent history will have much success at the polls. The best chance for success may hinge on our ability to redirect capital spending from education to transportation.

Here’s how it could work. The state would either pass a constitutional amendment or incentivize local governments to sunset the 1 percent E-SPLOST, which is a local tax, and replace it with a 1 percent statewide sales tax dedicated to education. Local governments would be required to roll back property taxes by an amount equal to their share of the $1.5 billion anticipated from the statewide sales tax. (For a table showing the potential property tax reduction where you live, go to

The school board would then decide how much additional money, if any, is needed for existing or future capital improvements. Based on current law, citizens would then approve a referendum to authorize the bonds to fund these projects.


Capital Spending per Student

Possible Georgia Savings



North Carolina






Source: 2010 Digest of Education Statistics

Is this reasonable? Georgia spends more money per student for capital improvements than all but seven states. As the chart shows, realigning our capital spending to the level of similar states would result in as much as $1.5 billion a year in savings. For comparison purposes, the T-SPLOST is expected to raise about $1.5 billion a year statewide, of which $700 million a year would be raised in the metro Atlanta region.

Assuming Georgia could reduce education capital spending by just 25 percent, the state would still be spending an amount equal to North Carolina each year. In this scenario, $850 million of the new state sales tax revenue would continue to be spent by local school boards on local capital projects. The remaining $650 million would be used to reduce property taxes. That’s a net tax cut of $650 million. It also clears the way for $650 million in funding for transportation projects – without a net tax increase.

Nearly every school system has a “Taj Mahal” tale, whether of grand buildings or fancy stadiums, because they are forced to spend E-SPLOST revenue on capital projects. But Georgians, like all Americans, have been hit hard by the recession and are ready to see government prioritize needs. Our top ten ranking in capital spending for education is a good place to start. Addressing problems like traffic congestion will require more money. But we must first take every available opportunity to realign spending to limit the tax burden on our families and businesses.

Kelly McCutchen is president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (September 9, 2011). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.

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