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New sales tax voted in – Expected to put $2.7M per year into county coffers

Escambia County taxpayers have had more than two months to prepare themselves for implementation of a countywide sales tax that will hopefully help stop the county’s financial bleeding. The revenue enhancement measure is now on the books and the one-cent levy will be added to cash registers across the county, effective July 1.

The Escambia County Commission voted unanimously during its Monday, May 22, meeting to impose the one-percent sales tax, which is designed to provide a buffer between plunging revenues and escalating expenses and to prevent significant cuts, both in the county’s workforce and in the level of services it provides.
The new governmental revenue stream will raise the sales tax rate to 10 percent for transactions conducted in Atmore, Brewton and Flomaton. In East Brewton, where sales already bring a 10-percent surcharge, businesses will now collect 11 cents on every sales dollar.

Commissioners have said that had the local tax measure not passed, the county was at a point where it would have been forced to lay off nearly two dozen employees and impose cutbacks in or eliminate several services due to a steady, 10-year drop in general fund revenue.

The financial crunch was fueled mainly by a yearly decrease of $2 million over the past five years in revenues from oil and gas severance taxes and landfill fees.

District 4 Commissioner Brandon Smith, who represents an area that includes Atmore and most of the immediate surrounding area, said the cumulative dwindling of those revenues finally caught up with – and surpassed – the county’s ability to fund itself.

“We lost a good chunk of change there,” he said. “Those two things are mainly what kept us balanced through the years. I don’t like taxes any more than anybody else does, but we had to do something to make up for that money.”

Smith said he has received mostly positive feedback from constituents, the majority of whom just want to see their roads fixed.

“I haven’t had any negative comments,” the District 4 rep said. “Everybody has been positive about it, especially once I’ve explained what they’ll get. I want people to understand that this tax will help provide services to the people and provide them in a better way.”

He explained that Atmore’s satellite courthouse most likely would have been put on the chopping block if the tax not been implemented.

“The satellite courthouse is very important to people on this end of the county,” he said. “We’re lucky to have it. A lot of the people down here are not physically or financially able to make a trip to Brewton every time they need to go to the courthouse. Without the money this tax will bring in, we would probably have had to close it.”

The taxing measure was introduced into the Alabama Legislature in March, gained approval from both houses in late April and automatically became law when Gov. Kay Ivey did not sign it within the required six days of it being placed on her desk. It will go into effect July 1 and is expected to generate nearly $3 million per year.

State lawmakers had to approve the tax, due to Alabama’s limited home rule law that prevents county governments from enacting revenue-producing or revenue-stimulating legislation.

Commissioners are hoping the sales tax will generate enough money to cover proposed budget shortages and leave at least a little to help with repairs, including new paving, for at least a portion of the county’s badly deteriorated road system.

“Everybody is concerned about their roads,” Smith said. “We’re hoping that the sales tax will bring in enough money that we can afford to do a little to fix some of those roads, especially our farm-to-market roads.”

Commission Chairman Raymond Wiggins said during the March 13 session that the impending revenue boost would hopefully stabilize the county’s finances so that outside funding will not be required for FY2018.

Last year, the Poarch Band of Creek Indians allowed commissioners to use $500,000 in tribal funds earmarked for infrastructure improvements to instead balance the budget. Had the tribe not loosened those financial strings, the county would have been forced to make the anticipated personnel and service cuts during the current fiscal year, which runs through September 30.

“We got every department to cut wherever it could, and we had to cut the amount we give to outside agencies … to balance the budget,” Wiggins said. “We finally got (the projected shortfall) down to about half a million, but we had nowhere else to cut and we were looking at laying off 18-20 employees. We appreciate what (Poarch) did, but we don’t need to depend on anyone else to help us balance our budget.”

County Administrator Tony Sanks reported Monday afternoon that, even with the badly needed sales tax revenue, county officials probably wouldn’t be able to put any significant amount of money aside for future rainy days. Not for a long time, anyway.

“We are hopeful that this sales tax will generate about $2.7 million per year,” Sanks said. “We have lost in excess of $2 million per year in revenue compared to five years ago and have had to make numerous substantial reductions to our budgets – deferring facilities maintenance, not replacing vehicles and equipment that were due for replacement, delaying projects and depleting financial reserves.

“While this sales tax is going to be a financial lifeline for the county, I do not expect to be able to build a surplus of any size for years as we recover from the revenue losses of the last five years.”