A pro-business group called Ad Hoc Committee on Growth and Growth Analysis has issued a call for tax reform in Mobile.
Conservative writer and activist Quin Hillyer presented the group’s platform to the City of Mobile Tuesday, saying the city’s “grossly imbalanced” tax structure is slowing down growth in The Port City.
The committee faults the city for relying too much on broad sales taxes, which experts say are regressive, and not enough on more predictable property taxes.
According to a report prepared by the group, “sales taxes (when combining local, county, and state) are… effectively tied for the highest in the nation… while its combined property taxes are among the lowest 9 percent in the country.”
“Broad-based sales taxes are at least marginally more deterrent to growth than property taxes and other common taxes,” the report reads.
Mobile sales taxes are even more regressive than in most states, according to the group, because unlike many other jurisdictions groceries and other necessities are not exempted, which means those who spend a greater percentage of their income on those items carry more of a burden.
Cutting the sales tax and replacing it with marginally higher property taxes would give average Alabamians a little more breathing room while not gutting city coffers, who may even stand to gain net revenues from such a shift.
“A 2003 study by the Beacon Hill Institute, specifically focused on Mobile, found that cutting a penny of sales or gross-receipts tax would, within four years, result in extra economic growth strong enough that city government would recoup 28 percent of the revenue originally ‘lost’ by the cut. In other words, a penny tax is such a deterrent to the economy growth that (extrapolating for today’s numbers) cutting the penny would result in a ‘loss’ to city coffers not of approximately $30 million, but only as little as $22 million,” said the report.
Towards that end, the Ad Hoc Committee put forth two recommendations: to cut the city’s sales tax by half a penny and replace those revenues with a fee for garbage collection, and cut another half-penny and replace that “(and provide an extra $4 million) with a ten-mill property tax, upon a vote of the public, with the money dedicated (and guaranteed public-infrastructure fund divided equally among the seven Council districts.”
The group proffered a public referendum on the change to help enact those changes. The language they proposed is as follow:
The City of Mobile is hereby authorized to hold a public referendum, at the earliest available opportunity, to the following effect:
Shall the city be permitted to levy an additional 10 mills of ad valorem tax, its proceeds allowed and only allowed for the purposes of public infrastructure spending divided equally among the seven City Council districts, and renewable once every four years upon approval in a subsequent public referendum each time, with each subsequent referendum held automatically without further action by the state Legislature –
– Provided that, the first time the millage is approved, the city shall be prohibited from charging a local sales tax of more than 4 percent for the duration of the first millage;
– Further provided that, upon each subsequent, automatic referendum for this purpose, the Mobile City Council may or may not, at its discretion and upon approval of five of its seven members, attach a sales tax limitation provision of any kind.
Pursuing their logic even further, the group is in favor of a constitutional amendment to effect similar changes at the state level, though they are careful to say such a move should be in addition to, rather than instead of, the municipal changes outlined above.
That proposed language, called “The City of Mobile Home-Rule Amendment,” is as follows:
This amendment shall be styled “The City of Mobile Home-Rule Amendment.”
Shall the city of Mobile, notwithstanding any other provision of the state Constitution in effect before 2015, be allowed through the year 2030, as a local “laboratory of democracy,” to exercise authority to adjust or create any revenue measure approved by five members of its City Council and approved by its Mayor, without petition to or approval by the state Legislature;
– Provided that any increase in the total local ad valorem assessment, above that existing at the time of the adoption of this amendment, shall automatically be subject to a referendum among those citizens within the jurisdiction of the millage, at the next regularly scheduled election, or at a special-election called by the Council and Mayor within 18 months of Council approval of the millage?