A federal lawsuit has been filed and is seeking class action against the state alleging property tax revenues do not sufficiently fund K-12 schools and disproportionately hurt black students. The lawsuit claims Alabama's method of funding education was based on the racially discriminatory property tax restrictions set out in the 1901 constitution, and those restrictions force local governments to use regressive sales taxes to raise school revenue.
The lawsuit alleges the state limits property tax for wealthy landowners with a constitutional limit on state and local property taxes and the requirement that people vote to change property tax rates. The lawsuit refers to the 1973 Lid Bill, which limits tax collections on a piece of property in any one year to a certain percentage of its fair market value. According to the lawsuit, 70 percent of Alabama's land mass is forest, but because of the percent ratio and the Lid Bill, forest land makes up only 2 percent of the state's property tax revenue.