Council takes up sales and property tax increases

Published 7:44 pm Wednesday, November 8, 2017

Taxes could be on the rise in Selma.

The Selma City Council is exploring increasing sales and property taxes to generate more revenue.

A sales tax increase would be the quickest way for the city to get more cash for its coffers. A sales tax increase only requires a majority vote of the council and could take effect after two meetings.

The council voted to put a 1-cent sales tax increase ordinance on first reading pending a public hearing and a final vote.

The sales tax would be for three years and earmarked for public safety, public works and infrastructure.

Council members Susan Youngblood, Miah Jackson, Johnnie Leashore and Michael Johnson voted to allow the possible increase to proceed to a public hearing, while Carl Bowline, Angela Benjamin and Jannie Thomas voted against it.

Council President Corey Bowie and Sam Randolph were absent.

Johnson said a sales tax increase was the quickest way for the city to find money for law enforcement officers and addressing problems like trash and a crumbling infrastructure.

He said he realized tax increases wouldn’t be popular, but that he wants to make Selma the best it can be.

“Right now, we need some help, and we need it right now,” Johnson said. “People want this done. Not like yesterday, they want it now. We’ve got to find a way to do this.”

Leashore agreed that the city simply didn’t have the money needed to provided services for citizens.

“We just don’t have the type of money we need to provide these quality services,” Leashore said.

Bowline said a sales tax increase would make it harder for Selma businesses to compete.

“The citizens are already paying for a lot. All we are going to do is run the businesses out of town by raising the sales tax. The downtown is already hurting already,” Bowline said. “I get it we need to raise money. I just don’t feel putting sales tax up yet again is going to do any good for the businesses out there that are trying to struggle to stay afloat.”

A 1-cent sales tax would increase sales tax in the city limits to a total of 11 percent.

East Brewton, Falkville and York are the only other municipalities in Alabama with an 11 percent sales tax, which is also the highest allowed under state law.

The average sales tax in Alabama is 9.01 percent, which is fourth highest in the country, according to The Tax Foundation.

Based on 2017 revenue projections, a 1-cent increase would generate an additional $2.1 million in revenue.

A property tax increase would be harder and take longer to institute. Any property tax increase would have to pass in the Alabama Legislature and then have to be approved by voters in Selma via a referendum.

The city’s current millage rate is 27, of which 11.8 is set aside for education.

That rate is the 12th highest of any municipality in the state, sandwiched between Birmingham, the largest city in the state, and Carrollton, which has a population of 1,019 in Pickens County.

The council discussed property tax increases of 10, 15 or 20 mills and how much money each would generate. With a 10-mill increase, Selma’s property tax rate would be third highest in the state, only behind Vestavia Hills (49.3 mills), Fairfield (40.5 mills) and Midfield (37.8 mills).

A 15- or 20-mill increase, would put Selma only behind Vestavia Hills for highest mill rate of any municipality in the state.

There is no city property tax in Valley Grande, while the rate is 8 mills in Orrville. Neighboring cities have the following millage rates: Demopolis (26 mills), Prattville (7 mills), Clanton (7 mills), Marion (6 mills) and Camden (5 mills).

A 10-mill increase would generate $1.2 million more for the city, while 15 mils would add $1.9 million and 20 mills would add $2.5 million.

Owner-occupied residential properties are taxed at 10 percent of their appraised value. Without considering exemptions, a homeowner with a house worth $100,000 house would expect to pay $100 more annually with a 10 mill increase. That number goes up to $150 for 15 mills and $200 for 20 mills.

Most businesses and other properties are taxed at 20 percent of their appraised value. Without considering exemptions, a business with an assessed property value of $250,000 would expect to pay $500 more annual with a 10 mill increase. That number goes up to $750 for 15 mills and $1,000 for 20 mills.

The council voted to authorize Darrio Melton to start talks with State Rep. Prince Chestnut and State Sen. Hank Sanders about supporting legislation that would allow a property tax increase earmarked for public safety, public works and infrastructure.

The mayor said there is a need to generate revenue but the city needed to look at making cuts and being good stewards of current revenue before asking citizens to pay more in taxes. He said a sales tax should be “a last resort.”

Melton said his office has left certain positions unfilled and encouraged the council to look at cost-cutting, pointing to the council’s discretionary and travel expenses as one place to save money.

“That’s over $100,000 right there … I think we need to do what we can on our end before asking people to raise taxes,” Melton said.

The mayor said his office canceled a business-related trip to North Carolina last week given the city’s current financial state. He said the city could also cut the money it gives to nonprofits and in fee waivers.

The mayor suggested the council look at business licenses and see how competitive they are and raise other fees.

“I think we need to put everything on the table and look from there,” Melton said.

The mayor said a property tax increase could help boost public safety and that would be something he could support.

“I’m for that. That’s a route we need to go for public safety. But to just say we need more money for the city — ad valorem [taxes] is not the way to go,” Melton said.