Tax could exceed expectations

A half-cent sales tax earmarked for economic development in the Shoals earned almost $600,000 in its first month of collection, putting it on pace to meet or possibly exceed expectations for the fund.

County commissioners, as a result of a legislative act, were allowed to increase the sales tax collections in Colbert and Lauderdale counties by a half-cent to help fund economic development initiatives in the Shoals.

At the time, the increase was needed for the Shoals to compete for a project labeled as "Project Tiger." National Alabama Corp. later announced plans to build an 1,800-employee operation at Riverfront Industrial Park in Colbert County manufacturing rail cars.

All money collected from the sales tax increase must go toward economic development, with expenditures being approved by a group of elected officials, known as the Shoals Industrial Development Committee.

The immediate responsibility of the fund is to pay incentives that were pledged while courting National Alabama.

The money collected in Colbert and Lauderdale counties appears to be on target with estimates showing the tax would earn $5 to $6 million per year, commissioners say.

Some commissioners say the account, when you consider the holiday season is still ahead, could exceed those expectations.

Colbert County Commission Chairman Troy Woodis said the overall purpose of the fund is purchasing land for industrial parks, paying for infrastructure and providing incentives to attract new industry.

Before that happens, however, the industrial committee must take care of the expenses spelled out in the agreement that brought National Alabama Corp. to the Shoals.

The committee must pay National Alabama $2 million within 60 days of the beginning of the plant's construction, Tuscumbia attorney Jimmy Hughston said. He said construction, as far as the agreement is concerned, refers to structural steel being erected at the site. At present, land is being cleared.

Afterward, the money will be used to pay financial incentives to National Alabama Corp. and to purchase land at the Barton park to accommodate the plant, which will be about one mile long and 400 feet wide.

The company anticipates production to begin in early 2009.

Hughston said the Shoals promised National Alabama Corp. up to $23 million in financial incentives.

That amount could be drastically reduced if the Gulf Opportunity Zone areas of Alabama, Mississippi and Louisiana, which were damaged by Hurricane Katrina, is expanded to include Colbert County.

Hughston said if Colbert County receives a Go Zone designation, the local incentive will be reduced to about $8 million.

He said the incentives are tied to benchmarks National Alabama has to meet before receiving local incentives. Those benchmarks include the company's capital investment in the plant and reaching certain employment goals.

Donnie Allen, owner of STACS, which collects sales taxes for Colbert County, Sheffield, Tuscumbia, Cherokee and Leighton, said officials hoped to collect about $250,000 per month in Colbert County.

"We had estimated in the neighborhood of $6 million a year," Woodis said, referring to the total annual amount collected in both counties.

Allen said the projection was based on an analysis of a typical tax year, excluding such items as automobiles, farm equipment and machinery used in manufacturing.

Allen said notices and a new tax reporting form were sent to 3,000 businesses that have filed taxes in Colbert County in the past three years.

Most of the businesses do business in Colbert County but are physically located in other states. Allen said about 1,600 businesses filed tax forms and paid the half-cent tax in August.

He added that about 300 businesses did not pay the additional tax in August.

Allen said the businesses were not avoiding the tax, though. He said it sometimes takes two to three months for the right employees at larger businesses to receive the new tax notification and program computers to reflect the new tax.

"It's a combination of the notice not getting to the proper places and people to make the changes," Allen said. "Any type of change we've made takes three or four months to get everybody on the right page."

Companies that have not paid the new tax will have to make the correct payments retroactive to August, Allen said.

Lauderdale County Administrator Jenoice Bevis said once the county receives its portion of the tax, they have 30 days to process it and make a payment to the industrial committee.

She said estimates of how much the tax would raise were most likely conservative.

Allen said it will take three or four months to get an accurate picture of what the half-cent tax will earn in a year's time.

"We've got the next couple of months coming up with the holiday season, which is probably going to be real strong," Woodis said. "It will be interesting to see how it goes over the next few months."

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