Georgia.

A citizens group has sued Atlanta's public school system, charging that it illegally collects about $47 million a year in taxes.

The suit, filed in Fulton County Superior Court by Joseph L. Kelly of the Georgia Association of Taxpayers, contends that the system is charging taxpayers a higher property tax rate than the 20-mill county limit allowed by the state constitution.

Kelly's lawsuit also charges that the system is illegally obtaining sales tax revenues.

Under a 1985 agreement, the school system shares 30% of a one-penny sales tax collected by the city, with the money used to offset the system's property tax rate. Georgia law does not permit school systems to directly levy sales taxes.

At a Sept. 23 hearing, school system lawyer John Myer claimed that the system has acted properly in levying its 23.44-mill property tax rate because it is a city-run independent school district. Myer also maintained that the sharing of sales tax revenues is permissible as an intergovernmental contract.

The lawyer for the plaintiff, Robert Proctor, has successfully challenged Atlanta in past lawsuits. Last fall, Proctor forced the city to cancel a $148.8 million general obligation bond referendure scheduled for March 15.

Proctor claimed that the city had violated state law by misstating facts about the proposed borrowing in printed notices announcing the vote. A district judge agreed and the referendum was eventually postponed.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER