School boards endorse constitutional amendment allocating online sales tax
By Wes Tomlinson
For the Enquirer
The three public school boards in Morgan County have all endorsed a proposed constitutional amendment, set to be on the November ballot, that adds permanence to a 2019 local law redirecting most online sales tax revenue from the County Commission to the school districts.
The Decatur City Schools board approved a resolution endorsing the amendment, which applies solely to Morgan County, Wednesday. Hartselle City and Morgan County school boards adopted similar resolutions earlier this month.
State Superintendent Eric Mackey said he would like to see some version of the Morgan County online sales tax allocation implemented statewide.
State Sen. Arthur Orr, R-Decatur, sponsored both the 2019 local law requiring the County Commission to allocate most online tax revenue to the school districts and the bill authorizing a countywide vote on an identical constitutional amendment that passed the legislature March 2.
State law allocates a portion of online sales taxes to county commissions. Under Orr’s 2019 law and the proposed constitutional amendment, the Morgan County Commission retains 5 percent of the of the revenue it would otherwise receive. It requires the commission to send 85 percent of the remaining funds to the three public school systems in the county, to be distributed proportionally based on enrollment. Another 1.5 percent goes to volunteer fire departments, and 13.5 goes to Morgan County Schools.
“Sales tax has always gone to schools,” Decatur Superintendent Michael Douglas said Wednesday. “When online sales started to explode, more and more brick and mortar (businesses) closed.”
Orr has said superintendents requested that the 2019 law be placed on the ballot as a local constitutional amendment so it would be less vulnerable to future legislative action and could only be changed by a subsequent constitutional amendment. Even if the amendment fails to win approval from voters, the 2019 law would remain in effect.
Douglas said the law and the proposed amendment provide local school districts with some protection against a shaky economy.
“You’re going to see a lot of school districts outside of Morgan County really struggle, and you’re going to see revenues decline because more and more people are shopping online,” Douglas said.
The amendment will not result in an increase in taxes – a fact emphasized in each of the school boards’ resolutions.
NO PLANNED OPPOSITION
Morgan County Commission Chairman Ray Long said he has no plans to dissuade residents from voting for the constitutional amendment.
“It don’t change anything,” Long said. “It’s just making (the 2019 law) a constitutional amendment. It doesn’t affect the County Commission one way or another.”
The local law took effect Oct. 1, 2019, but the Morgan County Commission did not initially pass a resolution on its agenda to redirect the online sales tax revenue as required by the law. The three school districts filed suit.
The commission fought the lawsuit, but the state Supreme Court ruled the legislature had the power to mandate that the County Commission redirect the online sales tax revenue it received.
Long said he did not agree with the 2019 law because it singled out Morgan County as the only county in the state to lose online sales tax funds, but he said he supports the county’s school districts.
“(The bill) was passed, and the courts decided it was legal,” Long said. “We follow the laws, so we don’t have any complaint with it. We’re not even trying to rehash it.”
Both the Decatur and Morgan County school systems have been using the online sales tax funds since 2019 to expand instruction in their classrooms.
“We’ve been hiring interventionists to help with remedial education,” said Morgan County school board vice chairman John Holley. “With the sales tax money, we’re trying to locally fund putting an interventionist in every school, kindergarten through third grade.”
Holley said if the constitutional amendment is voted down in November, his school district could suffer if future lawmakers amend or repeal the 2019 law.
“We’ll start losing teaching units and other resources because we just won’t have those funds available,” Holley said.
Douglas said the online sales tax funds are included in the school district’s general fund.
“We’ve used (online sales tax revenue) anywhere from hiring new teachers to capital improvements,” Douglas said. “It does help us make a payment on stuff like the new Career Tech building.”
Hartselle superintendent Dr. Dee Dee Jones said that since 2019, her district has been able to fund the building of a new elementary school because of online sales tax funds.
“It is allowing us to continue programs we have in place, and those funds are also helping us to build a new Crestline Elementary,” Jones said. “It won’t fund all of it, but it’s helping to support that.
“The way that I look at it, it’s just a way for the future of all three (Morgan County) school districts to continue to fund their programs.”
Jones said she plans to meet with Douglas and Morgan County Superintendent Robert Elliott Jr. this month to discuss the proposed amendment.
The online sales tax revenue going to the county and redirected to the schools and volunteer fire departments has steadily increased since 2019. The 2021 revenue was
$604,657 more than 2020 revenue. The online sales tax revenue payment this month was $238,388, up from $204,654 paid out in March 2021.
Mackey said he would like to see a statewide law that allocates such revenue to all school districts.
“From my perspective, we have to keep the schools and their benefit first and foremost in our minds,” Mackey said. “I think it’s fair we find a statewide fix so that the local school is getting a part of the local (online sales tax) distribution, just as they would if somebody actually went to a physical store.”