Tax may exceed projections

A half-cent sales tax earmarked for local economic development is well on its way to provide the estimated revenue area leaders believed it would produce when the idea was developed.

"When the idea first came up, it was believed that a half-cent sales tax could produce $5-$6 million a year," said Dewey Mitchell, Lauderdale County commission chairman and probate judge.

The half-cent sales tax went into effect Aug. 1, and after the first six months of collections, it seems the sales tax is well on its way to producing the estimated $5 million to $6 million per year and more.

According to officials in Colbert and Lauderdale counties, $3.57 million has been collected since August.

"I see no reason why the revenue will not continue on this pace, which would mean it will do what we anticipated and then some," said Colbert County Commission Chairman Troy Woodis.

The Shoals Industrial Development Committee, which was formed as part of the legislative act that allowed county commissions to impose the half-cent sales tax, oversees the proceeds. It is made up of elected officials from the two counties.

County officials said 10 percent of the proceeds goes to operations of the Shoals Economic Development Authority. The remainder goes into an account to be used as incentives for industrial recruitment.

Paying off some incentives that were pledged in the recruitment of National Alabama Corp,, a railcar plant being building in the Barton Riverfront Industrial Park that will employ up to 1,800, is one of the first things the proceeds from the sales tax will be used for, county officials said.

Local officials committed $2 million to National Alabama and $8 million to $23 million in additional incentives. That amount could be reduced if the Shoals area is included in the Gulf Opportunity Zone (GoZone) of Alabama, Mississippi and Louisiana, which was damaged by Hurricane Katrina. U.S. Rep. Bud Cramer, D-Huntsville, is leading the effort in Washington to get the area included in the GoZone.

If the area gets the GoZone designation, the local incentive will be reduced to about $8 million, according to area officials.

Woodis said another use of the sales tax revenue is to purchase land and develop infrastructure.

"It's hard to believe a half-cent can produce so much and be used for so much, but that's what's happening," said Lauderdale County Commissioner D.C. Thornton, a member of the Shoals Industrial Development Committee.

Thornton and other SIDC members, along with other county leaders, said the sales tax was a must if the area was going to continue to be competitive in the recruitment of new industry.

"We had to do something. In the past, the cities and counties had put up the incentive monies, but after a while, you can't continue doing that. You need a solid foundation of financing coming in," Thornton said. "That's what this half-cent gives us."

Muscle Shoals Mayor David Bradford, another SIDC member, said it had gotten to a point where the local governments were struggling just to cover SEDA's operation budgets.

"Not to mention any economic development incentives," he said.

Bradford said local governments came together in providing incentives for SCA Tissue, North American Lighting and Walgreens Health Initiative out of general fund monies.

"We just couldn't continue to do that," he said.

Woodis said another thing the sales tax revenue is doing and will continue to do is "give us a chance to compete" for other projects.

"There are a lot of communities out there that are great places to live, raise families and have land available for industry," Bradford said. "But that's not all an industry is looking for anymore. They want incentives. This sales tax revenue gives us the ammunition to compete with anyone."

Thornton said he has heard little if any opposition to the sales tax.

"People see what we're doing with the money and know that it's needed to help provide jobs and better paying jobs for our citizens," he said. "That was the intent to start with and it will always be the intent."

Tom Smith can be reached at 740-5757 or tom.smith@timesdaily.com.