“I hear people say, “this is a done deal,’” Councilman James McGowan said Tuesday near the end of the evening’s public hearing. “It’s not a done deal. I haven’t voted yet.”
McGowan said before he took office he said he would not vote for any new taxes, unless there was a dire need.
“This is a bad time to even talk about a sales tax,” he said, adding that the public was able to clearly show a need for more school funding.
The Pell City School System has seen a $4.8 million shortfall in state funding the past two years.
Most of the people at Tuesday’s hearing, spoke in favor of the tax hike for the school system. Like at Saturday’s public hearing pertaining to the sales tax increase, there was a large contingency of school system employees,
About 150 people attended the final public hearing Tuesday night at City Hall regarding the 1-cent sales tax increase and there was people who spoke for and against the sales tax increase.
According to city officials the last sales tax increase was in 1993, when the mayor and council voted for a 1-cent hike.
If the proposed sales tax increase is approved by the mayor and council next Monday night, the city will have a 10-percent sales tax.
Mayor Bill Hereford said the one-percent sales tax increase will provide about $2 million for the city and school system to share.
The council approved the first reading of a proposed ordinance last Monday, which would raise the sales tax in Pell City by a penny.
According to the proposed ordinance, the School System would receive half of the revenue generated from the sales tax increase, while the city would receive the other half. After four years, the city would receive all the money generated from the tax.
Hereford said the city needs the additional tax revenue to pay off a $12 million loan the city secure to fix its sewer system problems, its $3 million obligation for the new hospital, and its $8.5 million obligation to the Coosa Valley Water Supply District.
Hereford again told the audience that he projects deficit spending for the city the next four years. He said the city clerk projected an $800,000 deficit this fiscal year, followed by a $1.3 million shortfall the next two years and a $1.6 million deficit four years out.
The city clerk was not available for comment on how these projections were derived, even though the city finished last fiscal year, which ended Sept. 30, 2009, in the black and started this fiscal year with a 10-percent reserve on hand.
Councilman Greg Gossett spoke against the tax increase, saying the tax could actually be detrimental to the city and school system in tough economic times.
Councilwoman Dot Woods again said she supported to the tax.
“I truly believe we’re in debt, and we have to pay our bills,” she said. “…We need the penny to pay our bills.”
Councilman Donnie Guinn said the sales tax hike is a quick fix for the school system, which will only see this revenue for the next four years.
He said financial support of the school system should come from an ad valorem tax, not from a sales tax.
Councilman Donnie Todd was not present at Tuesday’s public hearing.
Opponents of the tax hike say the new tax increase will send shoppers elsewhere because the city’s sales tax is already too high. They say sales tax revenues will actually go down, not up, with the tax increase, and sales tax is not a dependable source of revenue for schools.
Opponents of the tax say with the economic downturn and local businesses closing their doors in recent months, this is no time to raise taxes. The tax increase, they say, will hit the poorest residents at the worst time. Some people also questioned why city officials say they are in dire need of additional revenue when those same city officials are still trying to buy expensive commercial property, the Avondale Mills property.
Proponents of the sales tax increase say the small tax increase would not break anyone and would help keep the city and school system moving forward. Proponents of the tax say they did not want to see the school system go backwards, and it is the school system that attracts new residents, industries and businesses to Pell City.
Proponents of the tax say the sales tax hike is an investment in the children, which is the future of the city. They say without additional funding the largest city employer, the school system, could be forced to lay off workers. Others say school programs could be cut without the city’s aide and the sales tax increase would be in line with other local municipalities.
Hereford said the council will discuss the sales tax increase at its 5 p.m., Thursday work session, and the council is expected to vote on the sales tax increase at next Monday night’s council meeting.
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