On January 1, 2025, Georgia’s House Bill 581 (HB 581) officially went into effect, limiting the amount by which local governments can increase property taxes. Signed into law by Governor Brian Kemp, this bill is designed to provide property tax relief for homeowners by capping the annual increase in property values for tax purposes. The law also makes changes to the state’s property and sales tax systems. While it’s it appears to a win for taxpayers according to some, it could have unintended negative consequences for Georgia’s local school systems.
Under HB 581, property tax increases are restricted to the rate of inflation, which was 2.4% in March of 2024, according to the Consumer Price Index (CPI). This means that local governments, including school districts, can only raise property taxes in line with inflation, potentially leaving them with fewer resources for funding vital services like education.
One of the most significant concerns is the potential for reduced funding for local schools. The Georgia Municipal Association reports that local governments have until March 1, 2025, to “opt out” of the new law, but opting out is a complicated process. Local governments must pass a resolution after holding three public hearings and advertising each one a week in advance. While this gives communities some flexibility, it could still result in significant funding cuts for local school districts that rely heavily on property taxes, according to some school personnel.
In fast-growing counties like Cobb, the bill could be especially harmful. John Floresta, with the Cobb County School District, points out that while protecting school funding is important for children’s education, strong schools also boost property values. In Cobb County, each student receives about $11,000 in educational services annually, a figure that falls behind neighboring districts, which spend between $12,000 and $18,000 per student. Despite its more conservative fiscal approach, Cobb has managed to remain debt-free while providing senior tax exemptions for homeowners.
So far, no school districts, including Cobb County, have publicly announced they will opt out of HB 581’s provisions. However, the law raises important questions about how local governments, particularly school systems, will manage potential funding shortfalls. While the intent of HB 581 is to ease the financial burden on homeowners, the balance between tax relief and adequate funding for public education remains a challenge. The coming months will reveal how school districts adapt to this new law and whether it leads to cuts in critical educational programs.
