What is the ESPLOST?

$Source: Digital Vision$

Source: Digital Vision

Would you vote for a 15% tax increase to fund government building construction and improvement? How about a 1% sales tax increase to fund education? It turns out that both sentences describe the Education Special Purpose Local Option Sales Tax, or ESPLOST.

Tuesday, Cobb County voted on renewing their ESPLOST for another five years.

The ballot read as follows:

Shall the special 1 percent sales and use tax for educational purposes currently imposed in Cobb County be reimposed on January 1, 2014, upon the expiration of the current version, for not longer than 20 consecutive calendar quarters, to raise not more than $773,278,976.00 to be used for the following educational purposes:

For the Cobb County School District:

(1) For renovations, modifications, additions, new schools, land, equipment, safety and security and technology systems at a total maximum cost of $717,844,707.00 for the Cobb County School District as described in the Notice of Election.

For the City of Marietta Schools:

(1) to pay $15,234,750.00 of principal and interest on outstanding bonds of the City of Marietta as described in the Notice of Election; and

(2) for renovations, modifications, additions, new schools, land, equipment, and security and technology systems; and systemwide support vehicles, at a total maximum cost of $40,199,519.00, as described in the Notice of Election.

Yes__ No__

The measure passed with a resounding 57.31% in favor. However, only 11% of eligible voters actually showed up. Since the ESPLOST program was created by the Georgia legislature in 1996, 94% of all education referendums have passed. Currently 98.7% of all Georgia counties have ESPLOSTs in place.

The interesting part of ESPLOSTs is that they can only be used for capital outlay projects (building new schools or improving and renovating existing schools), retiring previously incurred debt, or a combination of both. They cannot be used on operating expenses, such as teacher’s salaries. This limitation does not allow school boards to fully prioritize where their revenues go.

While overall, financial need for facilities will increase by approximately 34% over the next five years, according to a Georgia State report, there are variations between and within school districts. A school district that spends heavily on renovations and modernization this year will have less of a need for this in upcoming years. If all ESPLOST funding was redirected to operating expenses, it would increase operating budgets between 9 and 15% depending on the school district.

In 2010, a made it through the Georgia House but not Senate to allow ESPLOST funds to go to other purposes, such as operating expenses. Until a modification to the ESPLOST program goes through the state legislature, county and local school districts will have to follow the current formula. It would require a constitutional amendment to make the change.