Last Updated: May 29, 2011
This article appeared in the May 2011 Rural Policy Matters.
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The 1901 Alabama State Constitution places severe limits on property taxes and taxes to fund education. In the 1970’s, “lid bill" amendments further limited property tax options for local goverments. They also allow the option of ‘current use’ valuation for farm and timber property. This valuation (which rarely applies to small farms and timber holdings) yields very low reveues and applies to a high percentage of rural land. As a result tax lids and the "current use" provision, it is impossible for most rural counties to generate significant funds for schools. Alabama's property tax rates are the lowest in the nation as are its per capita property tax collections.
Presentation of evidence took four weeks, and the trial temporarily moved to Birmingham to accommodate witnesses, including retired governors and state and U.S. legislators from Alabama.
Among the former officials who testified were former Governor Albert Brewer and former state legislator Rick Manley, who is known as the “Father of the Lid Bill.” Governor George Wallace was a major focus of some of the testimony, which described how his desire to protect segregated education in the state was manifested in his support of the lid bills.
Defense witnesses disputed that there was any discriminatory intent in the laws, but several admitted under cross-examination that smaller rural school systems could see increases of up to 35% in property tax revenues if rates for farm and timber property were increased. Several witnesses for the state testified that although the tax system represents bad policy, it was not created for racially discriminatory purposes.
Past and present representatives of the Alabama Farm Bureau and Alabama Forestry Association were involved in the passage of the lid bills and actively support their continued use today. Those AFB and AFA leaders who testified claimed that their organizations’ actions were economically motivated to prevent high property taxes and had nothing to do with race.
By one witness’ estimate, the "current use" assessment on farm and timber property averages $460 per acre, but fair market value of that land is closer to $1600 per acre.
Several leaders in the state legislature testified that even if the judge did strike down the system, it would be unlikely that elected officials would vote to raise property taxes. However, on cross-examination, they amended their positions to say that if the current tax system were found discriminatory, they would not continue to support it.
One of the plaintiffs’ attorneys, James Blacksher summed up the case this way: "These big Black Belt landowners used white hostility to black education to place in the 1875 and 1901 state constitutions and in the 1971 and 1978 Lid Bill amendments provisions that undervalue their property assessments and restrict their millage rates... These restrictions still impoverish public schools in the Black Belt. But they also have hurt rural school systems everywhere in the state and have reduced the state school revenues available to urban school systems."
Sumter County Schools Superintendent Dr. Fred Primm describes the impact of the tax laws on his district and others: "in rural areas — and most of those rural areas being minority populated — it has really stacked the decks. We're working with very little local revenue. Basically you have no money to do anything creative or innovative."
A ruling is not expected for at least several months.
Court documents in the case:
Read more from the May 2011 Rural Policy Matters.