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Residents in Tuscaloosa voted down a referendum on Tuesday that would have increased the ad valorem tax rate by 22 percent to support the Tuscaloosa City School System.
The referendum was 705 votes short of passing, according to the unofficial results. 5,704 votes were cast in opposition of the measure and 4,999 voted in favor of the property tax increase. Voter turnout was just over 16.5 percent of registered voters in Tuscaloosa.
Before the vote, the increase had been approved by the TCS Board of Education, the Tuscaloosa City Council and the state legislature.
Tuscaloosa City’s current ad valorem rate is 51.5 mill and the average millage rate statewide is 42 mill. TCS receives 15.5 mill from the city’s 51.5 mill rate. The current state average is 21.8 mill going toward school systems.
The vote would have added an 11.5 mill increase to the ad valorem rate and was expected to generate $17.25 million per year for the schools, beginning in 2025.
In fiscal year 2025, TCS is expected to operate in a $6 million deficit and pull from mandated on-hand reserves to cover the shortfall. However, TCS will not be able to do this again in fiscal year 2026 as federal COVID relief funds expire.
“As we’ve mentioned previously, we will be able to continue our current services this year and into next school year, thanks to the wise financial decisions that built up our reserve over the last four years,” Superintendent Mike Daria said. “However, the reserve will draw down quickly. We believe we can make the necessary budget cuts through attrition and careful planning.”
Tuscaloosa has kept its ad valorem rate the same for nearly 40 years. Since 1986, there has been a 272 percent increase in the cost to run the Tuscaloosa City Schools.
Alabama is considered a low-tax state and boasts the lowest property taxes per capita in the U.S., according to a PARCA report from 2023.
Low property taxes benefit homeowners but pose challenges for local governments and schools that need adequate funding for services. Nationwide, property taxes are a more stable source of revenue.
In Alabama, however, local governments depend on other revenue sources. Cities in Alabama collect three times more in revenue taxes than in property taxes.
The resistance to raising property taxes is established in the Alabama Constitution. Amendment 373 states that all taxable property shall be assessed at the same rate, 20 percent of its fair market value. This can make it challenging for cities to raise funds through property taxes, as any increase must adhere to this framework.
