1-cent sales tax flops
By Staff
City left searching for revenue, CIP plan without funding
Leada DeVaney, Hartselle Enquirer
Tom Chappell said it was tempting to stay at the beach this week, soaking up the sun and enjoying a family vacation. Sitting on his hotel room balcony Tuesday morning, the Hartselle City Council member said he thought of skipping that night's meeting and the vote on the 1-cent sales tax increase he had been pushing.
But Chappell came back to Hartselle for the meeting, only to see his proposal fall as flat as an old beach ball.
"I'm disappointed," Chappell said. "It would have been real easy not to come back but that's not what I signed up for. I thought we could offer the leadership to move this city forward. What's next? I really don't know."
Chappell and Councilman Don Hall cast the only votes in favor of the motion to raise sales tax from 3 to 4 cents. Councilmen Frank Jones and Dick Carter and Mayor Clif Knight voted against the increase.
Carter said the slow economy and the up-coming Sept. 9 referendum on Gov. Bob Riley's $1.2 billion tax increase plan decided his vote.
"We see stores closing all around us and we saw our revenue pick up when Decatur raised theirs (sales tax,)" he said. "We need to see what Gov. Riley's plan does. If it passes, I will vote no (on any future sales tax increase.)"
Knight said the sales tax increase went against the city's efforts to be "business friendly."
"At this time, imposing a sales tax on merchants is counterproductive," he said.
Chappell proposed the sales tax increase last month on the heels of a revamping of the city's $28 million capital improvement plan. That plan was approved earlier this month, but now, financing for the plan is in doubt.
The 1-cent sales tax increase could have brought in as much as $1.4 million per year. That money would have been used to cover the cost of a bond issue to finance the CIP projects. Earlier attempts to legalize alcohol sales or increase property taxes – both of which would have fattened city coffers – failed.
Chappell – who left to rejoin his family after the council meeting – is left sitting on the balcony and scratching his head about where to go next.
"This was the last chance we had for a different source of revenue," he said. "I don't know what we're going to do. We're meeting our budget but we're only maintaining the status quo. If any body has any ideas, bring them forward."
Tobacco tax increase
While plans to raise the sales tax failed, the council did approve increasing taxes on cigarettes and other tobacco products.
The tax will increase from 4 cents to 8 cents per package on cigarettes and smokeless tobacco and from 2 cents to 4 cents per cigar.
The increase will go into effect Sept. 1.
Gov. Riley is also proposing an increase on tobacco products. Under his plan, the state's levy on cigarettes will increase from 16.5 cents to 31 cents per pack. The increase would generate some $52.4 million per year for the state.
The state had put all municipalities on alert that any tax increases on tobacco products must be done by Sept. 30, providing Riley's revenue package is approved.
However, according to City Attorney Larry Madison, the city could opt to lower its taxes to the old rate if Riley's plan passes.
The increased tobacco taxes will raise some $60,000 annually for the city.
