Tax plan may be the only solution

Ed Howell
Posted 4/6/17

Well, here is my evolving take on the county plan to raise its sales tax from 2 cents to 3 cents ...

The sales tax seems to be gaining certain traction. Certainly, I thought the mayors might give more negative feedback, as it would affect their …

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Tax plan may be the only solution

Posted

Well, here is my evolving take on the county plan to raise its sales tax from 2 cents to 3 cents ...

The sales tax seems to be gaining certain traction. Certainly, I thought the mayors might give more negative feedback, as it would affect their own sales tax. However, the reaction was mostly positive, with a few more or less sitting on the sideline. I am sure the cities may have felt somewhat comforted the commission would have $5.5 million annually in excess after bond payments, some of which could be spread to the municipalities for road work (which is needed). Moreover, besides $1.5 million a year to cover all the bond payments, public safety, firemen, economic development and the county’s own road and bridge needs would get help from the tax. And to sweeten the pot more, the hated $10 car and boat tag would be eliminated.

I have to say that looking at a broader picture has made an impression on me. Looking at county rates on the state Department of Revenue website, nine counties have already gone to 3 cents. Blount, Talladega and Russell counties, whose populations are similar to Walker County, are at 3 or 4 cents. Moreover, Blount County increased its tax in November with a referendum vote of 64 percent.

Sonny Brasfield, the executive director of the Association of County Commissions of Alabama, who has been with that group for many years, notes that other counties are also having to look at raising their taxes, and the reason is clear to anyone who covers local government in the state. After years of cutting taxes and cutting spending, which has in many cases been a good thing, we now have reached a point, 37 years after the Reagan Revolution, where you got most of the fruit, low hanging and otherwise, as far as taxes and waste. That’s not to say there are not still pockets of it, but county commissions have made do for about as long as they can.

Not only have they done their part for low taxes and budget cuts across the state, especially in small counties, but they all face decreasing revenue on gasoline taxes for road and bridge repairs, as vehicles are more fuel efficient. That subject has been talked about often, even by U.S. Sen. Richard Shelby on area visits, but no one has any solutions to the gasoline tax.

And consider that counties handle more than just roads and bridges (although some commissioners across the state seem to talk of nothing else). They take on these subjects, either in shared responsibility or in total involvement: County jails and deputies, emergency communications, economic recruiting, airports, elections, tourism, school funding, the courts and their security. Some are even involved with local hospitals.

Worse yet, inflation has continued to march, while the funding stays the same or decreases. Federal and state grants that were enjoyed for decades, even those used for drug units to combat illegal drugs, are drying up. It puts commissioners in a tough position. And many of them come into office thinking they are going to slash the waste, only to find not much is left. It usually leaves them in real shock.

But what may have really gotten my attention was Brasfield’s warning about something the commission seemed reluctant to bring up at first. I asked him about bankruptcy, and he noted the experiences of one county.

“Greene County has never overcome it. They are not the same, and I am not sure the county will ever overcome that in full measure,” he said, pointing to dramatic population declines.

“The county is really still mired where they were when they filed for bankruptcy,” he said. “Jefferson County (which also had bankruptcy) has bounced back better, but I think the folks there would tell you they struggle greatly.” As for potential bankruptcy in Walker County, “I would say that from where I sit in Montgomery, everybody in Walker County ought to be willing to do whatever they have to do to avoid that,” he said.

After that statement, I feel you will hear commissioners talk about it more. It certainly got my attention.

Can Walker County, which has its own challenges at times with declining population and economic development, afford to turn down the tax when it could mean bankruptcy? And could it be worse for us, because we are in the Birmingham-Hoover metro media market, meaning every Birmingham TV station will drive up to show statewide live shots of long lines at the courthouse? I’m not sure you ever overcome images like then when economic prospects come to call.

Think of it. This is probably our one shot to come up with a solution, as the Legislature will not come back into session in time for a Plan B before Fiscal Year 2017-18. If voters reject the sales tax, the county has some drastic cuts they have discussed — including, for the current year, an immediate hiring freeze and 15 percent decrease in all departments (except public safety) for the current fiscal year, as well as no overtime pay except when required by law. Then there would be up to 25 percent in department cuts for the new year starting Oct. 1.

Even then it may not cover all of the $1.4 million budget deficit that would be created, and you would have a stained image spread across the state that would likely hurt, especially in industrial recruitment. We may simply not have a choice but to have the 1-cent sales tax, which would fund some needs and catch up on road work that is badly needed.

It is still a little early, and it leaves me queasy, but at the moment, someone better come up with Plan B, because Plan A may be our only choice.