City officials fight to keep occupational tax funds

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Photo: Signs posted outside the town hall meeting room. (Emma Kirkemier/Messenger)

By Emma Kirkemier, News Editor

Local officials conducted a town hall meeting on Thursday, February 23 to discuss a bill proposed by State Senator Andrew Jones which would cap occupational taxes at 1 percent statewide.

Each of Etowah County’s five municipalities implements a 2 percent occupational tax.

City of Gadsden Mayor Craig Ford warned that, if passed, this bill could drastically affect the budgets of Gadsden, Attalla, Rainbow City, Glencoe and Southside.

The Occupational License Fee, or OLF, is paid by citizens who work in a municipality but who do not reside within its city limits.

“The City of Gadsden triples in population between 8 a.m. and 5 p.m.,” Ford explained. “So we have to have police protection, fire protection (and other city services) for all these residents coming in.”

According to Ford and Mayor Joe Taylor of Rainbow City, their municipalities use OLF revenue to fund city services without disproportionately increasing property taxes for permanent residents.

“The OLF is 30 percent of our general fund budget,” Ford said. “The OLF generates $15 million annually for the City of Gadsden. It provides for police, fire, road, bridges, parks and rec and sanitation (services), etc.”

Ford said that while the proposed cuts seem attractive at first, such an action from the state legislature would in fact force local cities to aggressively restructure their budgets and tax bases. This could create precarious financial situations potentially requiring downsizing and layoffs within city services.

“We have a $75 million budget,” he said. “If you take away $15 million, which Senator Jones wants to do, then we would be at $60 million, and we have $52 million already dedicated towards payroll. That leaves us $8 million to run a budget. That’s impossible. We cannot run a city for $8 million.”

The City of Gadsden pays retirement for numerous former employees under the Retirement Systems of Alabama, which Ford attributed as the main reason for a comparatively high payroll.

“I think it’s a great opportunity,” he said.

“Our employees work and do a great job for not a lot of money, but they do get good health insurance and they do get a good retirement. But we have to pay for that at the back end, so that’s built into that payroll.”

According to Ford, the payroll budget is somewhat non-negotiable, leaving just $23 million — or, after a hypothetical $15 million cut, $8 million — for city use.

“I have seen firsthand in the first 100 days (of my administration) what it takes to run a city,” Ford said. “It’s not us; it’s the employees.”

Those city employees, several speakers argued, would feel city budget cuts most heavily, and city services would significantly decrease.

“The effects of losing this Occupational License Fee would be detrimental to our fire department and to our citizens that we protect,” said Gadsden Fire Chief Wil Reed. “The loss of revenue would cause the loss of every fire station but four. We would have four fire stations left to run the entire city. Response times would increase, and response vehicles would be lessened. The number of firefighters would be cut from approximately 115 to approximately 55. There’s no way that we could provide the level of service that we provide currently with 55 firefighters.”

Reed also warned that with a lower-functioning fire department, city ISO ratings would drop, causing affected residents’ insurance premiums to increase.

“Our average response time is around 11 minutes right now,” said Gadsden Police Chief Lamar Jaggears. “Obviously, that’s going to increase if we’re going to lose officers.”

Ford expressed concern over police and fire department retention if this funding was cut.

“We have done everything we can do to try and get our retention up: recruitment videos, some pay increases, everything with the fire department,” he said. “The last thing we want to do now is lose our firemen that we’ve gone out and hired and our policemen that we’ve gone out and hired.”

City Services Director Tena King added that if funding to public works was cut, sanitation and other necessary services would suffer.

“Maybe the police and fire, that doesn’t affect you,” she said. “But I can promise you that public works will have a direct impact on your life.”

Several speakers, including City Director of Engineering Heath Williamson, Industrial Development Authority Executive Director David Hooks and Parks and Recreation Director Jen Webbington, pointed out that any significant cut in funding could grind to a halt the positivity and progress many have perceived lately in the City of Gadsden.

“We are right on the edge of some major positive improvements in the City of Gadsden,” said Williamson. “Don’t let the momentum stop.”

There are 25 Alabama cities total with an occupational tax. 16 of those cities charge 1 percent, and two cities less than 1 percent — Goodwater and Red Bay, which have OLFs of 0.75 and 0.5 percent, respectively. Seven cities charge above 1 percent, above Jones’ proposed threshold. The city of Opelika charges 1.5 percent OLF. The cities of Tuskegee, Gadsden, Attalla, Rainbow City, Glencoe and Southside charge 2 percent.

Etowah County contains five of the seven cities in Alabama with an occupational tax higher than 1 percent, an anomaly in the state.

However, Representative Craig Lipscomb argued that this tax structure reflects the distribution and need of the Etowah County population.

“The thing about Etowah County, it’s very unique,” Lipscomb said. “We’re the smallest county in the State of Alabama, geographically speaking. Every municipality touches another municipality. You can put one foot in Rainbow City and another foot in Gadsden; one foot in Attalla and another foot in Rainbow City. That makes us a very unique community, statewide. Anywhere else you go, you have to travel miles to get from one city to another, but not here.”

Etowah County’s five cities are hubs of activity for its overall geographically diffuse population.

“What that means is that we have a certain community that’s unique,” Lipscomb said. “It’s a community where we have to collaborate and we have to work together.”

Ford pointed out that while Etowah County is unique in its higher occupational taxes, the county and cities within boast some of the lowest property taxes in the state.

“Our tax structure is made up of about the fifth-lowest ad valorem tax in the State of Alabama, 2 percent occupational tax and a 10 percent sales tax,” Ford said. “Mountain Brook (for example) has one of the highest ad valorem taxes in the State of Alabama, zero percent occupational fees and 10 percent sales tax. That’s the way they run their government. We run our government with our tax structure how I just explained.”

State Representatives Mack Butler and Mark Gidley spoke, as did Etowah County Commission Chairman Craig Inzer, Jr., who said that the county is prepared to “step in” to help its municipalities.

“As a county commissioner that has three of the municipalities that this bill affects, I can tell you one thing I haven’t done in five years is tell them how to run their city, and I don’t expect the senator to tell us how to run our county,” Inzer said.
Several of the speakers called the legislation an “overreach” on behalf of the state government.

“What I want you to remember is that all five cities will be forced to make the same cuts,” Ford said. “This isn’t just about Gadsden. If I live in Gadsden and I work in Mayor Taylor’s city, I pay 2 percent occupational tax to Mayor Taylor. If Mayor Taylor lives in Rainbow City and works in Gadsden, as he did for 20-plus years as a firefighter, he pays 2 percent occupational tax to Gadsden.”

Mayor Taylor of Rainbow City, Mayor Larry Means of Attalla and Mayor Dana Snyder of Southside each spoke in opposition to the bill. Mayor Chris Hare of Glencoe was unable to attend.

“There’s a lot of things that we all share,” Taylor said. “And the one thing that we share is a population that has decided to move in a different direction, a region that is strong, that is vibrant. Rainbow City is growing. But we will stop growing at the point when you decide that you’re going to stick your hand into our coffers.”

Snyder explained that the 2 percent occupational tax accounts for about $600,000 a year within Southside’s $6 million yearly budget.

“That provides our SROs for our two schools,” she said. “That also provides some of our sanitation services and definitely the increase in police and fire that we’re trying to do right now by building a fire station.”

Means said he himself, along with Taylor, has paid the 2 percent tax to work in Gadsden.

“I paid that 2 percent for 24 years at the steel plant,” he said. “But you know how I looked at it? I used their roads, streets, sewer, water, everything to come there, to shop there. I didn’t mind it. Nobody likes taxes. I don’t want any taxes either, but like Joe (Taylor) said, we’ve got to have them to exist, to run a city.”

Means emphasized the unity with which the five mayors are approaching this issue.

“We’ve never disliked Gadsden or Rainbow City or anything; we just all did our own thing,” he said. “They say when something bad like this happens, it brings people together. I’ve never seen these five mayors so united. We’re together. We’re dug in.”

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