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Hoover City Council offers tax increase counter-proposal

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Photo by Jon Anderson

The Hoover City Council tonight shared a counter-proposal to the sales and lodging tax increases proposed by Mayor Frank Brocato two weeks ago.

Brocato on June 4 proposed raising the city’s share of lodging taxes from 3 percent to 6 percent and raising sales and use taxes from 3 percent to 4 percent.

Tonight, Council President Gene Smith substituted different ordinances that would keep the proposed lodging tax increase intact but cut the sales and use tax increase in half.

The council’s new proposal would raise the city’s portion of sales and use taxes to 3.5 percent instead of 4 percent and put the overall sales tax rate in Hoover at 8.5 percent in Shelby County and 9.5 percent in Jefferson County.

Smith also introduced an ordinance that would boost the city’s real estate rental or lease taxes from 1 percent to 2 percent, which was not part of the mayor’s tax proposal. This would impact anyone paying rent on an apartment or house in Hoover.

The mayor’s proposal was estimated to raise an additional $22 million in taxes every year for the city, including $20 million more in sales taxes and $2 million more in lodging taxes.

The council’s new proposal would raise an estimated $10 million more in sales taxes, $2 million more in lodging taxes and about $1 million more in real estate rental or lease taxes, for a total of $13 million in additional revenue for the city.

Melinda Lopez, the city’s chief financial officer, said the city needs an average of $11 million more each of the next five years to prevent projected budget deficits and provide enough money for basic capital projects that help maintain what the city already has.

The mayor also was seeking an additional:

Smith said he, Councilman Curt Posey and Councilman Casey Middlebrooks met with the mayor and City Administrator Allan Rice this past Thursday and told them they didn’t think the penny sales tax increase was going to survive a vote of the council. Posey initiated the counter-proposal, he said.

Basically, council members believe the mayor’s proposal would take care of the city’s needs, plus create a large sum of money that could be spent on whatever, Smith said.

“We’re asking the council to vote on what the city needs and only what the city needs,” he said.

While the mayor had a lot of great ideas of how to spend the money that would have been generated by his proposal, the bill for many of those projects would not come due until after the next election, he said. Smith said he didn’t feel it was appropriate for the current council to provide the next council with unfunded mandates.

The extra money that the mayor’s proposal would have generated is money that should stay in the pockets of residents and others who choose to shop in Hoover, Smith said.

Posey said he felt like the city had $11 million in annual needs, but the mayor was asking for $22 million per year in revenue. He doesn’t feel right asking people to pay twice as much as the city needs, he said.

If at some point in the future city officials decide to pursue some of the other projects the mayor mentioned, then perhaps the city can borrow money for those projects, Posey said.

“But at this point in time, the appetite of the people is ‘I’m willing to lend a hand to fill a hole, but I don’t want to give you extra to do projects that may or may not be the public will right now,’” he said.

Some of the other projects, such as a fine arts facility, also could be done through a partnership with private contributions, Posey said.

Middlebrooks said the mayor’s original proposal was ambitious in his desire to increase city services and the standard of living in Hoover and diversify the city’s economic base and provide more support for schools, and he commended him for that.

But the counter-proposal is a good compromise and workable solution for the city’s needs.

“I think the amended proposal allows us to continue our standard of living, continue adding to the city somewhat,” Middlebrooks said. "It doesn’t give any more money to the schools like the original proposal, but I am fully supportive of Hoover City Schools going after the lid bill and further funding our schools through the use of the property tax, which is a more stable revenue source.”

Brocato has said he would be willing to work with the school system to ask the Legislature to let Hoover go above the statewide cap of 75 mills of property taxes, if and when the school board thinks it needs to do so. Hoover residents currently pay 72.6 mills of property taxes. The school board and City Council would need to ask the Legislature to approve a public vote on the matter across Jefferson and Shelby counties.

Smith called a special City Council meeting to consider the tax increases on July 10. Originally, the tax increases were slated for a vote on July 2, but Smith noted that is the week of the Fourth of July holiday and many people may be out of town. He wants to make sure people have an opportunity to share their thoughts at the council meeting when the vote takes place, as well as during the council’s July 2 meeting, he said.

There’s no guarantee that the tax increases in the counter-proposal will pass, but he is in favor of them and expects a 4-3 or 5-2 vote to approve them, he said.

Brocato said his push for additional revenue is a work in progress. He thinks the mood of the council is to address the most immediate needs right now, and he hopes city leaders will continue to work to address other needs in a timely manner, he said.

There are still a lot of conversations taking place about how to address the school system’s needs and a lot of different opinions on the best way to do that, he said.

The counter-proposal up for a vote on July 10 will help address the most immediate needs and help city officials as they prepare a budget for fiscal 2019, he said.

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