LETTER: Hype-r Inflation is ‘all wet’
In the interest of making the whole truth known about inflation, per capita sales tax and real expenses related to the proposed sale of alcohol in Hartselle the following information is offered.
The argument the city has lost 13.2 percent of its buying power due to inflation seemed “terribly misleading” by omitting that sales tax revenue has also increased 13.2 percent due to inflation over the last ten years. So the inflation argument is a “wash out.”
In their most recent letter, HCED appeared to update their revenue projections by implying alcohol sales will level the playing field between Hartselle and its wet neighbors in the area of per capita sales tax. The new estimate calculates to be $2,823 per person in annual alcohol sales. That is $40.4 million (vs. $8.4 million) per year of alcohol sold in Hartselle. Talk about “hype”r inflation, that’s not 13.2 percent. That is 482 percent – can you believe that?
The economic decision on the wet/dry issue should be based on realistic net income projections. As a city-wide group exercise, I invite your readers to calculate their own estimate of how much revenue Hartselle would receive from the sale of alcohol. (multiply the population of Hartselle (14,322) by the average amount spent per person on alcohol multiplied by 6.8 percent which is the rate used in the previous two estimates to cover alcohol sales tax and licensing revenue). Decatur estimated a reduction of $185,000 if Hartselle goes wet; which is $190 per person – if you can believe that.
To see the whole “rosy picture” enforcement expenses have to be considered. Two enforcement officers to enforce the city’s ordinance on the sales ratio of food to alcohol – deduct $80,000. A vehicle and related expenses – deduct $40,000. Professional fees to audit the books of all the new eating establishments to ensure ordinance compliance – deduct $10,000. Additional expenses related to conducting the customary sting operations – even though we know none of the convenience stores in Hartselle would ever sell prohibited substances to underage customers. Deduct $5,000. If alcohol revenue is $150,000 per yr. and related expenses are $135,000 per yr., the net gain is only $15,000. That is 0.14 percent of the city’s proposed 2012 budget – which, by the way, is less than 10 percent of the current rate of inflation.
Now that’s the whole truth. Who do you believe?