SEDA officials seek sales tax increase

Commissioners in Colbert and Lauderdale counties were asked Tuesday to support a sales tax increase of up to one-half cent to provide an incentive fund to help lure industry to the Shoals.

Shoals Economic Development Authority officials met with commissioners during their scheduled meetings Tuesday to request the sales tax increase and said it is necessary if the area is to successfully compete for major industrial projects.

The issue of an incentive fund has been debated for several years, but the urgency of the matter has escalated in recent months with a major industry looking at the Shoals for site of a possible plant. The company would employ about 1,500 workers.

A tract at the Barton Riverfront Industrial Park in Colbert County is a finalist for the project.

State economic development officials and local leaders, including SEDA officials, have been working on the project since early 2006. The ability to provide a competitive incentive package for the company is considered paramount in the negotiations.

Exact figures were not available Tuesday, but SEDA officials expect the tax to generate between $3 million and $6 million annually in the two counties. They estimate that a family with a household income of $40,000 would pay about $4 per month.

A $100 purchase would cost a consumer 50 cents more than what it costs today.

The increase would mean that consumers would pay 8½ cents in sales tax on every dollar spent for purchases in Florence and 9 cents for purchases made in Sheffield, Muscle Shoals and Tuscumbia.

County commissioners are being asked to adopt a resolution requesting local state legislators to pass a bill authorizing the counties to increase sales tax up to a half-cent for the sole purpose of economic development.

Time is crucial with the start of the legislative session less than month away. Without the bill being approved and the counties enacting the tax, several SEDA

and government officials say the project now looking at Barton will not be possible. Similar projects in the future will also be in jeopardy, SEDA officials said.

"This project brought to the forefront this need," said Macke Mauldin, president of Bank Independent and SEDA board chairman. "Hopefully, we will be successful, but if not, there will remain a need for a constant funding mechanism to help provide incentives.

"We have an opportunity to be proactive and move this community into a position it has never been in during its history. This would (help in) economic development moving forward, and we would become the No. 1 place for economic development in Alabama. This would take our community where we want it to be in 2020, 2030 and 2050."

Based on the recommendation from SEDA officials, the tax would be assessed on general sales items such as clothing, groceries and general merchandise. It would not include purchases on items such as automobiles. The county could alter that plan, however, and include all sales.

Lauderdale County commissioners said they would need hard facts before deciding the issue. In Colbert County, commissioners said they would vote on the issue at their next meeting Feb. 20.

Lauderdale County Commission Chairman Dewey Mitchell said details must be worked out before commissioners vote.

"I'd like more information on the proposal before I vote," said Commissioner William Smith, with commissioners D.C. Thornton and Ronnie Brown expressing the same need.

"If we want good jobs, we're going to have to have some kind of fund," said Commissioner Larry Irons. "This is a very small amount to pay for better and more industry in our area. This would enable us to pick and choose from the top industries from the U.S. and foreign countries."

Colbert County Commission Chairman Rex Burleson appeared to be receptive to the plan.

"You're in a bidding war now to get industry into your county," Burleson said. "I'm going to be out there in front."

Burleson said money for economic development would have to come from the residents of Colbert County. He said the county and municipal governments "don't have it."

Commissioner Troy Woodis said the area has been waiting a long time for "a home run," referring to landing a large industry with good paying jobs.

"If this community wants good, top paying jobs, the name of the game is coming up with incentives (and the) only way to come up with incentives is to come up with the package to do it," Woodis said.

"The only way to play at this level we're trying to play at right now is to pass some type of incentive package," Woodis.

While the additional revenue might not guarantee this project's success, it would provide SEDA with the opportunity to pursue similar projects, he said.

If approved, the extra tax would be collected until the commissions decide to take it off. Mauldin cautioned, however, that it will "take several years for us to reach the level where we can control our own destiny."

Colbert County Commissioner Emmitt Jimmar said he doubted the tax would ever be rescinded. He expressed some skepticism about how the money would be controlled.

Shoals Economic Development Authority Executive Director Forrest Wright said it would be controlled by members of SEDA board of directors and an oversight group composed of local elected officials.

SEDA officials said several options for funding the incentive initiative were discussed. Mauldin said among those options were attaching a monthly fee to utility meters, a $25 charge to car tags, increase the gasoline tax by 2 cents to 3 cents per gallon, adding an occupational tax and increasing property tax.

He said none of those options made sense as far as meeting the objective of the incentive fund.

Mauldin said he's like everyone else and does not like the thought of paying more taxes, "but we're going to get more out of this tax than any tax we pay now."

Wright said he often hears from people who say they "don't mind paying a little more if they're getting more than they are getting now." He said the tax increase would do that.

Wright said having an incentive fund would open some doors to companies that have previously been closed. It would also give the community a tool "to even the playing field" with other competing communities.

"Five or six years ago, our community told us they wanted more jobs here and now we're hearing they want higher paying jobs," Wright said. "That's a more difficult challenge to meet and we can be successful, but that comes at a cost. We have been trying to determine how to drive that venture and bring in more jobs that our children and grandchildren are looking for."

Tom Smith can be reached at 332-0140 or tom.smith@timesdaily.com.

Russ Corey can be reached at 740-5738 or russ.corey@timesdaily.com.