“I feel the city is going to have to do this to meet its obligations,” Pell City Mayor Bill Hereford told the council at its Thursday afternoon work session.
Hereford pointed to future obligations the city must meet in the near future, including paying off a $12 million bond the city secured to fix its sewer system problems, its $50,000 a year obligation for the new St. Vincent’s St. Clair Hospital, and its obligation to purchase a required amount of water each month from the Coosa Valley Water Supply District when the new surface water treatment facility is up and running.
Hereford said the city’s sales tax will increase from 9-10 cents on the dollar, which will amount to about $2 million a year.
He said during the first four years the new sales tax is implemented, half of the money raised from the 1-cent increase will go to help support the school system. After four years, the city will receive the entire amount from the new sales tax increase.
“Our school system is really having terrible financial problems,” Hereford said.
Dr. Bobby Hathcock, superintendent of Pell City schools, was at the work session, along with Michael Barber, the assistant superintendent.
“It’s not a popular thing,” Hathcock told the council. “I don’t like paying them (taxes) either.”
Hathcock said because of proration, the school system has seen a $4.8 million shortfall in state funding the past two years.
“And 2011 is going to be a worse financial year in Alabama,” he said. “We don’t have any reserve. We’re looking at $1 million in the red.”
Hathcock said in Sept. 30, 2008, the school system had $2.9 million in reserve, but because of back-to-back years of proration the school system only has, as of Dec. 31, $698,402 in reserve.
Hathcock said in November the school system borrowed $320,000 in order to make payroll, but the school system repaid the loan in December.
“We’re talking about people losing their jobs and still being in the red,” Hathcock told the council Thursday.
He said the school system was in pretty good shape before the economic downturn.
“Hopefully the economy will get better,” he said.
Hathcock said he doesn’t want the school system to take two steps back after so many years of moving in a positive direction.
“I’m not too proud to beg for our kids,” he said. “I’m asking you to do it on behalf of the kids.”
The majority of the mayor and council will have to vote in support of the sales tax increase.
Councilman James McGowan appeared to support the sales tax increase, but suggested the school system reap the benefit from the new sales tax increase.
“I think we do have a good school system, and I don’t want to go backwards,” McGowan said. “I think the public would accept this a lot better if they knew it was going to the school system.”
Councilman Donnie Todd said he supports the original agreement where the city and school system would share the proceeds from the additional one-cent sales tax the first four years, and where the city will be the sole beneficiary of the sales tax increase after that initial period.
Councilman Greg Gossett said he would not support the sales tax increase unless the public had ample time to comment.
“I don’t think the mayor and council should impose a tax,” he said. “We need to have public hearings. If this comes up for a vote Monday night, I will vote no.”
Hereford said he would only introduce a proposed ordinance for the sales tax increase Monday night.
“I will not seek to pass this ordinance Monday night,” he said.
Hereford said the council will set two public hearings for public comment before the council considers the passage of the ordinance at its council meeting in February.
Council members Dot Wood and Donnie Guinn both said they would support the sales tax increase.
Guinn also said he would like public comment on the propose sales tax increase.
“My first preference is to let the community decide what to do,” Guinn said. “They need to have input.”
Hereford also said part of the money raised from the new tax could go for paving city streets.
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