A decades-old agreement between Mobile County Commissioners and city of Mobile officials is making the transition to a state tax collection system a little more challenging.
Since 2013, the Optional Network Election for Single Point Online Transactions, or ONESPOT, has been provided a single online destination for filing monthly state, county and municipal sales, use and rental taxes.
The new system was a welcome change for Alabama business owners previously required to file those taxes with every city and county in which they operate. However, the city of Mobile has historically helped collect a portion of Mobile County’s sales taxes — part of an arrangement dating back to former Mayor Sam Jones’ time on the commission.For years, the city has provided that service in exchange for a 5 percent administration fee of the taxes they collect, which traditionally has been used to pay Mobile County for rent, maintenance and utility costs of the city’s offices in Government Plaza.
Whether they’re collected through ONESPOT or through the city, the Mobile County License Commission is tasked with auditing those tax receipts before they pass to the county, but with the shift to the new state program, the county had planned to eliminate the license commission’s role.
However, sometime between the tenure of License Commissioner Nick Matranga and his predecessor, current Revenue Commissioner Kim Hastie, the plan was abandoned.
“Under Kim Hastie, the County Commission was going to take the sales and use tax department away from the License Commission because they wanted to run it themselves,” Matranga told Lagniappe. “However, the commissioners then agreed to maintain sales tax under the License Commission. But we’re going to need a computer program to run that.”
According to Matranga, a computer program would be necessary to interface with the ONESTOP program, and though there is one currently operating, it was designed by ousted computer programmer Victor Crawford.
Crawford, who had worked for the county for years through his business, APL Software, was most recently employed through the License Commission to program the systems behind its license and vehicle registration operations.
However, APL’s contract was terminated in late 2015 in favor of a cheaper option from Ingenuity Inc. At the time, Matranga was critical of APL’s “broken” system, and now he says the sales tax program Crawford left behind has similar issues, but without anyone to fix them.
“It’s a patchwork, and we’re running out of gas on that program because there’s no one maintaining it,” Matranga said. “The reason we didn’t [include it with Ingenuity’s contract] was because I was under the impression the county was going to take over the tax program.”
According to Matranga, having Ingenuity run a similar program to interface with ONESPOT would cost the county roughly $106,000 over the next three years. That doesn’t include the $180,000 Ingenuity has already billed to set up its current operation or the company’s $11,000 monthly service charge.
Despite that, Matranga said Ingenuity would still be less expensive than APL was. However, issues involving APL and Crawford have proven to be a “personal” subject for County Commissioner Merceria Ludgood in recent months.
Crawford was instrumental in the federal corruption probe into the License Commission culminating in Hastie’s high-profile trial last summer. Hastie was acquitted of all but one of 18 charges, but Ludgood has publicly said she felt Crawford’s involvement cost him his lucrative county contract.
Last month, Ludgood also voted along with Commission President Jerry Carl to prevent salary increases at the License Commission which Matranga planned to fund with savings from Crawford’s contract, but both commissioners expressed concern about using funds budgeted for operations to bolster personnel spending.
Yet, with those issues on the periphery, Ludgood said it was the outlying issue of the city’s sales tax agreement that motivated her to delay expanding Ingenuity’s programming contract. When asked, Ludgood said she does not see “how the expenditure fits with [the county’s] current reality.”
“I think at one point the idea was that between the city and ONESPOT, there would be no need for a fully staffed tax collection division in the License Commission and we could just pull it all into county administration, but we started looking at the contract [with the city], and I think we just maintained the status quo because the contract has so much in it,” Ludgood told Lagniappe. “I don’t think we’ll have any real meaningful engagement around what that might mean until we finish our contract with city because it throws too much into play.”
Though the contract with the city may make things more complicated, Matranga said someone is going to have to be on the hook to process sales taxes still coming in from various sources. In this year’s budget, sales taxes make up a considerable portion of the county’s $127 million in revenue — a projected 3.37 percent increase from last year despite “stagnant” property tax revenues.
“Someone has to be able to manage the ONESPOT program. If it’s going to stay in the License Commission; otherwise the county will have to pay the city for that purpose, which is about $60,000 per month,” Matranga said. “This [computer system] could fail tomorrow. If that fails, it’s going to have to go through the city, and we’ll have to start paying for it.”
Matranga first raised the issue during the commission’s May 23 meeting, but it was delayed so commissioners could examine the situation further. The county’s next scheduled meeting is Monday, June 13.
When asked about her motion to delay a decision, Ludgood said she wasn’t sure how the county would be required to pay the city for collecting sales taxes, adding that “they’d be doing the same things that have always been done” under the existing contract.
Regardless of what the county does, the city of Mobile will still be facing a decision of its own. If more businesses continue filing their taxes online through ONESPOT, Matranga said the city’s 5 percent cut will eventually fail to cover its rent in Government Plaza.