The Gulf Shores City Board of Education filed a lawsuit against state and county officials last week, seeking a proportionate share of a one-cent sales tax it believes should be distributed to both public school systems in the county. Gulf Shores voted to separate from the county school system in 2017, but a separation agreement wasn’t reached until after the city filed a similar lawsuit in 2019.
As a result, both school systems are funded proportionately using the state’s “Average Daily Membership” (ADM) formula, but the county retains 93.84 percent of local revenue while only 6.16 percent is reserved for Gulf Shores. In fiscal year 2021, the county estimated it would receive roughly $148 million from countywide ad valorem and sales tax, while Gulf Shores was expected to receive about $11.2 million.
Gulf Shores Superintendent Dr. Matt Akin said the latest lawsuit targets a penny tax originating in 1983, noting the city system attempted to negotiate with the county outside the courts, but “now we are asking the courts to rule that a portion of this tax revenue rightfully and fairly belongs to the children of Gulf Shores.”
Akin further argues that businesses in Gulf Shores contribute 15 percent toward the sales tax, and while it allegedly generates an additional $25 million for the county, “children in Gulf Shores receive zero.”
“The residents in Gulf Shores are paying the tax, yet our kids don’t see the benefit,” he told Lagniappe last week.
As such, the lawsuit adds a Gulf Shores resident, Kelly Walker, as a plaintiff.
“The imposition of the tax that is paid over to the Baldwin County Board of Education on residents of Gulf Shores, Alabama, unconstitutionally imposes on them a tax whose proceeds are used completely outside of the geographic limits of Gulf Shores,” the complaint states, noting Walker has paid the tax “and has been injured thereby … A bedrock principle of our democracy is that taxation and representation go together. There, taxes must be imposed on those who benefit from the tax. The 1983 tax is not apportioned and burdens the taxpayers of the city of Gulf Shores disproportionately while they receive no benefit from the tax. As such, the tax is an unconstitutional taking of the property of the citizens of Gulf Shores.”
Akin and Gulf Shores City Schools Board of Education President Kevin Corcoran said although State Rep. Steve McMillan sponsored a bill during the last legislative session to divide the tax, other members of the local legislative delegation were not interested in supporting it. Additional negotiations with the Baldwin County Board of Education (BCBOE) were also fruitless.
“We spoke to [BCBOE] and they had a meeting on the subject but they weren’t willing to agree to do a proportionate share,” Corcoran said. “So after exhausting those avenues we were left with putting it in front of a judge.”
Corcoran explained that there are three, 1 percent sales taxes that in total or partially support public education in Baldwin County.
“Two of them are pretty straightforward and we do receive our pro-rata share of those funds,” he said. “Then there is this third one, that is split between the Baldwin County Commission (55 percent), the Baldwin County Board of Education (40 percent) and Coastal Alabama Community College (5 percent). That law came into effect in 1983 and there was only one public school district in Baldwin County at the time. Now there are two, and we’re asking for our fair share of that because it is a tax collected for the purpose of public education.”
Local tax revenue comprises 56 percent of Gulf Shores’ budget, while 30 percent are state funds and 14 percent is federal. Comparatively, Baldwin County collects 47 percent of its revenue from local tax, while 46 percent of its budget is state funded and 6.4 percent is federally funded.
The lawsuit seeks declaratory judgment or mandamus against State Superintendent Eric Mackey, the Baldwin County Commission, and Baldwin County Revenue Commissioner Teddy Faust.
For its part, BCBOE appears poised to continue to fight the effort.
“For nearly two years, Baldwin County Public Schools negotiated with the city of Gulf Shores where both parties agreed to a very detailed separation agreement,” Superintendent Eddie Tyler offered. “How is Gulf Shores not getting their ‘fair share’ if the settlement we have today is the one they negotiated and agreed to in writing? Of course, they are getting their fair share. We have kept our word on each of our obligations and even today, we are still paying for expenses on behalf of Gulf Shores City Schools as a part of that agreement. For Gulf Shores to come back two years later and sue for additional revenue, to the detriment of Baldwin County students, is very disappointing.”
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