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Photo by Sarah Finnegan.
Hall-Kent Elementary students walk home from school.
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Photo courtesy of Jennifer Andress.
Members of the Homewood City Council went to Montgomery in late January to present their case for an exemption to the lid bill to members of the State House’s Jefferson County delegation.
Homewood City Schools’ population grew by 764 students from the 2006-07 school year to 2016-17. In that same time, the school system’s share of the city’s property tax revenue has grown by only about $1.1 million per year.
In a school system that annually spends $12,359 per student — or about $9.4 million for those 764 students per year — that math doesn’t add up.
Homewood schools receive funding from state, federal and other sources, but 44 percent of the system’s most recent budget came from local funding, primarily through property taxes. The school system receives 45 percent of the city’s property tax revenue, which totaled $7.8 million in the 2017 fiscal year, as well as two special school taxes that collected an additional $7.7 million.
That revenue helps fund everything from teachers and textbooks to maintaining and improving the school buildings. And since Homewood is currently constrained by the statewide property tax lid bill, there is no way to increase the funding for the schools if the city and residents decide it’s needed.
Members of the Homewood City Council and school system are mid-way through the process of requesting a lid bill exemption, which would open up the possibility of raising property taxes in the future.
The lid bill caps property tax millage rates — or the rate per $1,000 of property value — at certain rates per type of property. Jefferson County Chief Deputy Tax Assessor John Powe said the cap for residential properties is 100 mills, the commercial cap is 75 mills and the public utility cap is 82 mills.
“Homewood is actually bumping up against the cap of class 2 [commercial] properties, which is 75 mills,” Powe said, which means it can’t raise the property tax at all without exceeding the lid.
“Any time there’s a millage increase, it’s across the board,” Powe said. “It will apply to everybody.”
Rate increases also affect vehicle tax rates, as well.
The lid bill was passed in the mid-1970s and Powe said Homewood’s property tax rate has been the same for a number of years due to that lid.
The issue of the lid bill came up in the City Council in 2016, when the council voted to increase sales taxes by one cent to repay a $110 million bond for a series of school system and city projects.
Residents argued at the time that a property tax increase — which can only be done by citywide vote and approval from the state legislature — would be a more fair way to pay for school projects, but the City Council did not have that option.
Three cities are exempted from the lid bill because their millage rates exceeded the cap before the bill was enacted: Vestavia Hills, Mountain Brook and Huntsville. In part prompted by the discussion around the bond, the City Council and Superintendent Bill Cleveland decided to pursue an exemption for Homewood, too.
“It gives the residents of Homewood the ability to control their own taxes and their own future. Mountain Brook and Vestavia have this option and Homewood simply doesn’t,” City Council Ward 4 Representative Alex Wyatt said.
Both the city and the schools passed unanimous resolutions to support a lid bill exemption in 2017. At the end of January, most of the City Council traveled to Montgomery to meet with the Jefferson County delegation in the State House. Wyatt said they were met with support from all sides.
“All four of our legislators have been very supportive of this,” he said.
House District 46 Rep. David Faulkner said he supported the exemption for Homewood because it puts control of property taxes back in the residents’ hands. Few other cities have reached the millage rate cap, he said, and he didn’t hear any fellow representatives disagree with the idea.
“City leader after city leader after school board member came to me and said, ‘We need this in Homewood,’” Faulkner said. “There’s very few communities that are like Homewood.”
The exemption passed the State House on Feb. 15 and passed the Senate on March 1, Wyatt said. Homewood still has one more hurdle to clear before receiving its exemption. A state constitutional amendment to allow the exemption will be added to the November ballots for Jefferson County voters to decide.
Wyatt emphasized that the City Council isn’t making plans for a property tax vote if Homewood receives the exemption.
“There haven’t been any discussions of, ‘Does that need to happen any time soon?’” he said.
He said he doesn’t know how residents feel about an increase in property tax, but he has heard positive reactions to an exemption regardless of whether a vote on a tax increase is ever held.
“I have yet to find anybody that doesn’t believe we should have the ability to control that ourselves,” Wyatt said.
“This really should be a voting decision left to the citizens of Homewood, and we are glad to be working toward that reality,” Ward 3 Rep. Patrick McClusky said.
Ten-year resident and father of two Scott Dean said he supports the lid bill exemption because he wants Homewood’s schools to remain competitive against its neighbors.
“I think it’s fine now, but with the infrastructure and the way it’s aging for all the schools and the way we’re having to borrow to cover it, there’s going to be a need for additional revenue,” Dean said. “[Vestavia Hills and Mountain Brook] are similar to us in terms of the school system and what we’re trying to compete against, and we’re doing it with less money, or one hand tied behind our back.”
Since the process requires a countywide vote during a general election, waiting for the future could mean adding an extra year or more to the timeline for receiving a lid bill exemption.
“If we wait until we need it, we’ve waited too late, because it might be as much as three years or more at that point,” Wyatt said. “Well if we already need it, we have a problem.”
How Homewood’s property tax works
Homewood’s ad valorem property tax is currently capped at 75 mills (or the rate per $1,000 in property value) due to the statewide lid bill. Here’s how it breaks down:
- 75 mills: Total property tax
- 31.7 mills: City of Homewood
- 6.5 mills: State of Alabama
- 1.35 mills: Jefferson County
The Homewood City Schools system receives 45 percent, or 14.2 mills, of the City of Homewood’s property tax revenue. In the 2017 fiscal year, this equaled about $7.8 million in revenue for the school system.
Homewood City Schools also receive funding from two special school taxes, one that is 5.5 mills and one that is 9.6 mills. These taxes generate about $2.9 million and $4.8 million, respectively, for the school system each year.
Source: Homewood City Clerk's Office, Jefferson Country Tax Assessor
Homewood City Schools Budget
- 2017 Fiscal year revenue: $74.5 million
- 44 percent local funds (including property tax), 26 percent state funds, 3 percent federal funds and 27 percent other funds
- $12,359 spent per student (not including debt and capital improvement expenses)
Source: Homewood City Schools
