The Mobile City Council’s finance committee on Tuesday recommended bringing a five-year extension of a one-cent sales tax increase to the full council for a vote.
Committee Chairman Joel Daves and Councilman Fred Richardson voted in favor of the five-year extension, while Councilwoman Bess Rich recommended letting the tax increase sunset in 2018 to further study alternative funding sources.
The council could vote on the proposal as early as next week. Council attorney Jim Rossler said all the aspects and earmarks from the original ordinance would remain intact, but the amended ordinance would sunset on Sept. 30, 2023. The current tax increase is set to expire on Sept. 30, 2018.
It appeared that a majority of councilors at the committee meeting were in favor of the city’s program that splits roughly $31 million in revenue from the sales tax increase equally among the seven council districts. The money is then used for district-specific infrastructure improvement projects.
At issue for at least one councilor, Rich, was whether sales tax was the best way to gain the revenue needed for the program. Rich was chairwoman of an ad-hoc committee on taxation. The committee recommended a 10-mil increase in property tax and a garbage fee be used to replace a half a cent in sales tax.
Quin Hillyer, a member of that ad-hoc committee, spoke to the finance committee. He told councilors raising property tax would be more stable than sales tax. In addition raising property taxes would be more fair and more business friendly in the long run.
“Studies over the last 40 to 50 years have shown that a sales tax is the most regressive tax there is,” Hillyer said. “Studies also show that sales tax is more of a deterrent to business growth than other taxes.”
Although councilors agreed they’d keep an open mind about looking into funding changes in the future, most felt they would need to gain support of a property tax increase before pulling back on the sales tax.
A move to increase the non-school property tax the city receives would take an act of the Legislature and would be voted on by the citizens.
Councilman Levon Manzie said there is no appetite currently in his community for an increase in property taxes. He added that the poorest in his community get assistance and are not as impacted by sales taxes as others.
Richardson took it a step further and argued that an increase in property tax would hurt the majority of his constituents living in Crichton and Trinity Gardens, as most are homeowners. He said a property tax increase would help those making “$50,000 or $60,000” per year and renting the nicer apartments in the city.
Richardson asked Rossler if the extension would allow councilors to make amendments. Rossler said it would. Manzie indicated he would be asking to amend the ordinance, but wasn’t ready to release information on those proposed changes.
This story was updated on Nov. 1 to clarify Councilwoman Bess Rich’s recommendation.