The mayor and council made their comments at the end of a public hearing held Saturday morning at City Hall.
“This is the biggest turnout we’ve had since we’ve taken office,” Mayor Bill Hereford said during the public hearing, which lasted close to 2 hours.
More than 200 people attended the first of two public hearings concerning a proposed one-cent sales tax increase.
It appeared the vast majority of those in attendance were in favor of the sales tax increase, although it was evident that most of those in attendance were School System employees.
James McGowan said before he took office he pledged he would not vote for a sales tax increase, but he said Saturday he feels the city needs to help the School System during these hard economic times.
McGowan said he would like to give all the proceeds from the tax hike to the School System for the next four years.
According to the proposed ordinance, which passed its first reading last Monday, the School System would receive half of the revenue generated from the sales tax increase, while the city would receive the other half. After four years, the city would receive all the money generated from the tax.
If the council approves the increase, the city sales tax will jump from 9 to 10 percent on the dollar.
Councilmen Donnie Todd and Donnie Guinn said it was best to fund the Pell City School System with an ad valorem tax, but that was not possible.
Todd said 52 percent of the students in the system live outside the municipality of Pell City.
“This is the best solution at this point and time,” he said.
Guinn said he would support the sales tax increase, but added the school board and school administrators have failed to establish a school district, which would allow the School System to move forward with a possible increase in ad valorem taxes by a vote of the people.
“Sales tax is not the way to fund it,” he said.
Guinn, along with Councilman Greg Gossett, also voiced concerns as to what will happen when the city pulls funding from the proposed tax four years down the road.
“We’re going to be right back here,” Guinn said.
Gossett said the temporary nature of the additional revenue for the School System is one reason he is against the sales tax increase.
“If this passes, you are going to get it for four years, then we’re going to jerk it away,” Gossett told those in the audience. “You have lost $1 million, now what is that going to do to your School System?”
Hereford said the new sales tax increase will generate about $2 million in additional revenue for the city and School System to split.
Gossett said he supports the School System and has done so in many ways.
He said the ordinance for the tax hike was introduced to the council Monday without any discussion, and he questions whether city officials could find another solution to the financial difficulties facing the city and School System without raising taxes.
“We have not really sat down and discussed this,” he said.
Gossett also alleged the School System was only a beneficiary of the propose tax hike as a way to help rally support for an unpopular tax increase.
Councilwoman Dot Wood said the city needs all the revenue generated from the sales tax increase, and that giving half to the School System was a compromise.
Hereford said the city needs the additional tax revenue to pay off a $12 million loan the city secured to fix its sewer system problems, its $3 million obligation for the new hospital, and its $8.5 million obligation to the Coosa Valley Water Supply District.
“The city needs the whole penny,” Wood said. “We’ve got to take care of these debts.”
Those in favor of the sales tax increase at Saturday’s hearing said the small tax increase would not break anyone and would help keep the city and School System moving forward. Proponents of the tax said they did not want to see the School System go backwards, and it is the School System that attracts new residents, industries and businesses to Pell City.
Proponents of the tax said the sales tax hike is an investment in the children, which is the future of the city. They said without additional funding the largest city employer, the School System, could be forced to lay off workers. Others said school programs could be cut without the city’s aide and the sales tax increase would be in line with other local municipalities.
Opponents of the tax hike said the increase would send shoppers elsewhere because the city’s sales tax is already too high. They said sales tax revenues will actually go down, not up, with the tax increase, and sales tax is not a dependable source of revenue for schools.
Opponents of the tax said with the economic downturn and local businesses closing their doors in recent months, this is no time to raise taxes. The tax increase, they said, will hit the poorest residents at the worst time. Some at Saturday’s hearing also questioned why city officials said they are in dire need of additional revenue when those same city officials are still trying to buy expensive commercial property.
The city will host its final public hearing on the sales tax increase at 6 p.m. Tuesday at City Hall. The mayor and council are expected to vote on the sales tax increase at its meeting Monday, Feb. 8, at 6 p.m.
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