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Georgia House Bill 581 Opt Out

The Henry County Board of Education took action in January 2025 to opt out of the newly authorized “floating” exemption created by Georgia House Bill 581/House Resolution 1022.

This board action does not impact other exemptions offered locally, such as the senior or veteran exemptions.

In 2024, the state legislature provided a ballot option – House Resolution 1022 – that was approved and authorizes the state to set limits on the amount property taxes can increase annually, effectively setting a cap on the revenues a taxing entity can generate.

School districts had a single opportunity to opt out of the property tax cap by March 1, 2025. Failing to do so would lock districts into potentially damaging financial constraints through compounding restrictions in local property tax earnings.

“With the restrictions of House Resolution 1022 in place, Henry County Schools will not be in a position to match the growth of our community with the growth of our school district. Tax collections help fund our schools relative to the financial health and growth of the community. As homes become more valuable, capping property tax revenue available to the district each year would prevent the county’s largest employer from offering competitive compensation, innovative programs, and state-of-the-art facilities suitable for a healthy community.” Shanika Clay,Henry County Schools Chief Financial Officer

Property taxes are the basis for a school district’s general fund, which supports daily operations, including teacher salaries, textbooks, instructional materials, safety and security, utilities, and maintenance. For HCS, local revenues account for 50% of the funding that is available for the district’s expenditures, and these funds are derived from the local tax digest.

In Henry County, the tax digest, or assessed value of all homes in the county, is catching up to similar sized counties.

Of the 10 largest school districts in the state, Henry County ranks ninth in the size of its digest. However, Henry County ranks third among these districts in terms of the percentage of property tax revenue exempted (presently 22% of the digest value) due to available local and state exemptions prior to House Resolution 1022.

For context, the median net digest value of the 10 largest districts was $29.8 billion in 2023, while Henry County’s digest value for this period was only $12.6 billion. With the relatively small size of the tax base and numerous exemptions already available, Henry County is at a comparative disadvantage in having access to property tax revenue to provide supports to students.

“The cap imposed by House Resolution 1022 introduces uncertainty, especially in economic downturns, as it does not protect school revenue from negative local real estate market trends. Not opting out limits our district’s ability to respond to our community’s needs, and over time would result in reductions in services our school system can provide,” said Clay.

While Henry County’s homes are becoming as desirable as similar communities in Metro Atlanta, the school district plays a key role in that desirability.

The hyperinflation of 2022 and 2023, which House Resolution 1022 is designed to target, is not the norm for Henry County. The tax digest grew by an average of 7.63% from 2014-2021, with outsized growth of 20.67% and 21.54% in 2022 and 2023, respectively, before settling back at 4.88% in 2024.

“In those years when the tax digest grew by 20-plus percent, the Board of Education strategically directed the funds to advance priorities of this community, making targeted investments in academic programs as well as safety and security,” said Clay.

These investments include a combined $42.4 million in competitive compensation, 29 elementary STEM teachers, 21 middle and high school fine arts teachers, 21 middle and high school campus safety monitors, and an additional 56 certified teacher positions. Most – if not all – of these investments would not have been possible with the restrictions now imposed by House Resolution 1022.

“Adding the House Resolution 1022 exemption to the exemptions already locally in place would create an incredibly restrictive environment, effectively taking local control from the Board of Education to appropriately use property tax revenue to offer competitive compensation, provide innovative academic and wellness supports, and much more,” said Clay.

In accordance with HB 581/HR 1022, the board held three public hearings on Jan. 13, 2025, at 9 a.m. and 6:30 p.m., and Jan. 27, 2025, at 4:30 p.m., required by law to opt out of the statewide adjusted base year ad valorem homestead exemption. All three hearings took place at the District Office, located at 33 N. Zack Hinton Parkway in McDonough.