The city’s sales tax rate will stand at 10 percent for the foreseeable future, after Mobile city councilors approved an extension of a 1-cent sales tax increase for another five years. The extension, by a 6-1 vote, gives the council a funding stream for its popular Capital Improvement Plan (CIP) until Sept. 30, 2023.
Councilwoman Bess Rich voted against the extension and was instead in favor of a recommendation from an ad hoc committee she chaired that would replace the current sales tax increase with a combination of a garbage fee and a 10-mill property tax increase. The state Legislature would have to approve a measure that would allow the city to have a referendum on a property tax increase.
Quin Hillyer, a member of the ad hoc committee, told councilors the “extra penny” would be a “long-term detriment” to the city. He said the 10 percent sales tax would cause a downward spiral for local businesses and urged the council to “within a year” provide the public with a plan to provide alternative funding.
“Let the citizens decide not whether to fund the [CIP] program, but on its source of funding,” Hillyer said.
Sales tax, he said, was proven to be more volatile than other forms of tax revenue, adding sales taxes were detrimental to business and are the most regressive form of taxation. He added that the city’s tax structure was “grossly imbalanced” due to its reliance on sales taxes.
In a letter, Rich admonished colleagues for failing to listen to members of the ad hoc committee they appointed. She added that if no changes are made, the city will once again have to transfer money from the capital budget to the general fund in order to allow the city to operate properly.
Councilwoman Gina Gregory voted for the extension, but said she supported researching alternative forms of revenue. She also touted the CIP and what it has helped the council and the administration to accomplish in three years.
Councilman John Williams admonished “opponents” of the sales tax increase for not lobbying members of the Legislature sooner, in order to have a plan in place before now.
“If opponents of the tax spent their time going to the Legislature instead of throwing colleagues under the bus, it may already be done,” Williams said.
Williams said the extra sales tax is helping the city reduce debt via efficiencies found by Mayor Sandy Stimpson’s office. Williams said it’s helping to rebuild infrastructure and revitalizing the economy. He added that it is not chasing business away.
“Amazon came to us without any economic incentives,” Williams said.
Councilman Joel Daves voted to approve the extension, but also seemed open to exploring new revenue sources.
Councilman C.J. Small also supported the tax increase, but indicated he would be willing to research alternatives. He also argued that approving the five-year extension didn’t mean the council couldn’t review it in two, three or four years if an alternative presented itself.
Councilman Fred Richardson said he thought the city would have a hard time convincing the financially strapped state to approve a tax for the city’s use.
“If they can’t pass a tax to pay their own bills, I don’t think they’ll pass a tax to pay ours,” Richardson said. “If they passed it, they’d put most of it over to them, anyway.”
Gregory reminded Richardson that the state would not be passing a tax for the city, but would instead be allowing the residents to vote for it.
Stimpson told councilors a reduced sales tax rate of 9 percent would be great. He reminded them the CIP is not tied to the increase, but rather the sales tax increase is a source of revenue for it. He said the city’s leadership could find alternatives.
In other business, the council delayed for a month a vote on the final approval of a settlement between the city and Waste Management over the diversion of yard debris from the WM-managed Chastang landfill.
The city currently disposes of yard trash, or construction and demolition waste, at Dirt Inc., even though a 1994 contract dictates that the entire waste stream, including yard debris, should be sent to the landfill 40 miles away.
WM has successfully sued the city’s Solid Waste Disposal Authority over the diversion previously and had threatened to do so again before working out a settlement with the city.
The settlement includes an annual $378,000 payment to WM for the diversion in order to avoid another multi-million-dollar lawsuit.
City Attorney Ricardo Woods told councilors in spite of the amount, the settlement saves taxpayers money because Dirt Inc. charges a much lower tipping fee than Chastang.
In addition to the settlement, Woods asked the council to approve renewal of a $2.8 million contact with Gulf Hauling & Construction for receiving, processing and disposing of the yard waste. While Woods said a delay would be OK, he cautioned that WM’s patience could run out and they could sue again.
“We don’t want to stand on the train tracks and see the light coming and say ‘what’s that light,’” Woods said. “Especially in light of an $8 million judgment already awarded to them.”
Jaime Betbeze, an attorney for WM, said following a pre-conference meeting that the company was satisfied with the delay as long as the settlement was progressing.
Asked by council attorney Wanda Cochran if the city was named in the initial WM lawsuit, Woods answered “no.” When asked by Cochran if there was a judgment against the city, Woods again said “no.”
Cochran initially asked for the month-long delay to allow her to review the documents in question.
Also, in response to the city of New Orleans and tweets from Mayor Mitch Landrieu, Stimpson on Tuesday gave other cities, such as New Orleans, the official OK to celebrate Mardi Gras, since Mobile was the home of the first organized Carnival celebration.
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