The Mobile City Council on Tuesday approved a resolution in opposition to proposed state legislation top officials are calling a “money grab.”
The legislation, known as SB130, would piggyback on a 2015 law establishing a Simplified Sellers Use Tax, or SSUT. The SSUT allows online retailers that do not have a nexus in the state, or brick-and-mortar locations, to opt in to pay a reduced sales tax rate.
Assistant City Attorney Florence Kessler said retailers such as Amazon that opt into the program would voluntarily pay 8 percent sales tax. Of that, 4 percent would go to the state and the other half would be split among the city and county based upon population.
It sweetens the deal for the state, Kessler said, as the funds from the tax go directly into the general fund instead of the education trust fund.
If the proposed legislation goes into effect, retailers with an online presence and physical retail locations would be allowed to opt in for the SSUT for all of their internet sales, Kessler said.
The change would cost the city at least $11 million in tax revenue per year, based on 2016 projections, Executive Director of Finance Paul Wesch told councilors Tuesday during a pre-conference meeting.
“We’re already losing $3 million to $5 million per year from Amazon [due to the SSUT],” Wesch said. “It is pretty devastating when you look at the numbers.”
To complicate matters, Kessler said the city had already been looking into forcing Amazon to pay the full 5 percent city sales tax on items purchased online, given that Mobile has an Amazon-owned Whole Foods within its jurisdiction. By allowing all online retailers to opt out of their internet sales, the city obviously misses out on that too.
Additionally, Wesch said the legislation would give big stores such as Wal-Mart and Target a 2 percent advantage over local retailers, who would be subject to the entire 10 percent sales tax.
Councilors discussed doing more than just a resolution that would notify legislators of their displeasure. Councilman John Williams said city councilors need to meet with lawmakers face to face in order to help get their point across. He warned that failure to do so could cost the city its popular capital improvement program.
“We need to be on the phone and meet in person with these folks,” WIlliams said. “We need to do all we can. The CIP goes away if this happens.”
Councilwoman Gina Gregory asked Wesch and other city officials why they thought the state would even consider passing such a bill. She asked if it was simply a “money grab.”
“Yes, it is,” Wesch said.
In most cases, Wesch said the proposal would benefit the state because it would be available for the general fund and benefit counties, as it would provide a tax rate of 2 percent instead of 1 percent or 1.5 percent.
Conversely, Kessler said it would cut the city’s tax collection on internet sales for retailers with a nexus in the municipality by roughly 3 percent.
In other business, the council voted unanimously to affirm an appeal of a Tree Commission decision to deny permits to remove 27 trees in the right-of-way along Bit and Spur Road for a forthcoming sidewalk project.
Mayor Sandy Stimpson’s office brought the appeal to council after the Tree Commission denied the permits despite the mayor’s certification of the removal. By state law, if Mobile’s mayor certifies a tree’s removal for either public safety reasons or for efficiencies in service, the Tree Commission must approve the permit.
In this case, the commission did not approve the permit, despite Stimpson’s certification, which is what brought about the appeal, city Attorney Ricardo Woods told councilors Tuesday.
“We’re here today because someone either did not understand the law, or refused to follow the law as it is written,” he said.
Attorney Brian Thames, secretary of the Village of Spring Hill, said the tree removal was necessary to allow for the sidewalk installation along Bit and Spur Road. The city applied for grants on behalf of the village and the village organization raised the money for a 20 percent match of the grant.
“This whole deal really relates to a sidewalk project,” Thames told councilors. “In order to complete the project, a number of trees have to be removed.”
A majority of the trees in question were water oaks, Bradford pears, pine trees and others. Among the group are two live oaks, Thames said. Of the live oaks in question, one is diseased and one is stunted due to its proximity to a wall.
Tree Commissioner Jesse McDaniel told councilors that the board appointed by the council would’ve probably approved the request based on the project’s merits if Stimpson hadn’t attempted to circumvent them with the certification.
“It’s my belief that the law does not intend to allow the mayor to abuse his public safety authority … on a routine vote of the Tree Commission,” McDaniel said.
Commissioner William Rooks said he felt a breakdown in communication was to blame for the denial. He said no one from the Village of Spring Hill or the mayor’s office was in attendance to explain what the plans were.
Woods argued that planner Bert Hoffman and urban forester Peter Toler were both in attendance at the meeting in question. He added that supporting documentation was also included for the commission’s review.
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