“Increased taxes are never popular,” Mayor Bill Hereford said. “However, we expect that the additional revenue from this tax increase will enable us to meet our obligations, both now and in the future.”
Hereford said the city’s obligations specifically include rehabilitation of the city’s sewer system, acquisition of water sources, and the new St. Vincent’s St. Clair Hospital.
“We already made commitments in those three areas,” he said.
Hereford said the decision to raise the city’s sales tax was done after much research and thought.
“You don’t do this casually,” he said. “You do it when it is necessary, not before. I am satisfied as mayor and proud of the council (for their decision). I think we are doing what needs to be done and doing it responsibly.”
Hereford said city officials won’t know how much actual revenue the sales tax increase will bring in until residents shop.
“Typically in our city, a penny in tax is worth about $2 million in revenue,” he said. “That is based on historical experience. There is no reason to think it won’t (bring in that much revenue) now.”
Kathleen Reaves, revenue supervisor for the city, said she is not sure how the new tax will affect shopping.
“One-half of the 1 percent increase is going to the Pell City School System for the next four years,” she said.
Reaves said for the current fiscal year up to the end of March, the city took in just over $4.5 million in sales tax at the 9 percent tax rate. During that time, the city gave slightly more than $1.1 million to the Pell City School System.
“After the first of July, the numbers should be available (on how much additional revenue the city is receiving),” she said.
Reaves said other factors, such as the tax-free school shopping weekend in August, may affect how much additional revenue the city will receive.
Linda Crow, owner of La Ti Da, said she does not think the additional sales tax will hurt her business.
“Most of our merchandise is lower priced,” she said. “High-ticket items are where I think people will research and see where they can save on tax dollars.”
Crow said customers have become savvy shoppers, especially in the current economy, and they look at sales tax as a consideration when purchasing high-ticket items such as patio furniture, rugs, artwork and other more expensive home interior items.
“Our customers are not likely to find another place selling the same items with a cheaper sales tax,” she said. “But I think some of the other stores may be more affected.”
Bob Watson, owner of Watson’s Computers/Radio Shack, said he does not believe the sales increase will affect business one iota.
“I am not opposed to the sales tax increase at all,” he said. “I would rather pay it and it go to Pell City than go somewhere else. The city and the school need it.”
Watson said the extra sales tax is small, $5 extra on a $500 purchase.
“It is not worth driving to Birmingham and spending a lot on gas to save money (from the sales tax),” he said. “Even $10 extra on a $1,000 purchase wouldn’t be worth the gas money.”