By Lee Weyhrich
Clay City Councilman Mark Halstead suggested a 2 percent sales tax increase during the city council meeting Thursday. Halstead’s suggestion was not made as a formal council proposal, but Clay Mayor Charles Webster said the suggestion does have merit.
“He just sort of brought it up, off the cuff,” Webster said. “As the mayor and council we haven’t discussed it that much. I had talked to him about it before, though.”
With the recent budgetary cuts the city could survive on its current revenue stream, the mayor said. That is, if the city was not already in debt. The current revenue is not enough to dig the city out of its financial trouble in a timely manner. Other area cities have as much as a 10 percent sales tax. Clay’s sales tax is among the lowest in the area at 8 percent, Webster said.
“I don’t like having to use taxes to retire debt,” he said. “I would like taxes to go to increased services. We have kicked it around a bit to see what kind of revenue we could bring in, and we could get $40,000 per penny of tax.”
Halstead said part of the tax would be earmarked for a three-month reserve fund required for municipalities.
“When Pinson had that tornado, they had money in the bank to help cover those expenses,” Halstead said. “Pinson had that reserve fund. Clay did not. We spent money out of our general funds and other funds to pay for that. If we had another disaster, I don’t know what we would do. We’re trying to get Clay more financially secure for the future.”
If a tax increase were to be considered officially, Webster would want that money earmarked for debt reduction and an increase in city services. This would help free up the city’s current funding for future use. Webster said there would be more immediate results with a sales tax increase compared with a property tax.
“The city does not currently have a property tax,” Webster said. “The quickest solution would be sales tax. Within 30 days we would have that revenue coming in. With property tax we would not see any revenue until next year.”
Although Halstead proposed the sales tax, he wanted people to know that Clay was financially secure.
“We’re not going bankrupt or anything,” he said. “We’re financially OK. We just need a reserve fund like we’re supposed to have. This 2 percent would help us. When you go to Trussville you pay 10 percent. We think now is the time to make ourselves more level with other cities.”
No official decision will be made about a sales tax in the immediate future, Webster said. No decision will be made unless the mayor, council and Clay residents can reach some sort of agreement.
Halstead agreed, saying he doesn’t believe a sales tax increase would place an undue burden on merchants or shoppers.
“Everywhere you shop, Walmart, PetSmart, just about anywhere else, you pay 10 percent,” Halstead said. “We’ve recently had to lay employees off to relieve our outflow. That’s no fun. You don’t want to do that. I just kind of threw the tax increase out on the table to let people know what I think, not only as a councilman but also as a resident of the city.”
“I would like to have one or two town hall meetings before we do anything,” Webster said. “I would like some citizen feedback on it. We want to get their feedback first.”
Webster added that a one-cent sales tax would not discourage him from shopping at local stores. He does not believe it would place undue burden on merchants or shoppers
Webster expects the issue of a sales tax to come up formally in the future, but for now it is merely a discussion topic.
“I think the smart thing to do is discuss it at the next couple of council meetings,” Webster said. “Then we need to set a time for a town hall meeting to let people discuss it with us. Then we will decide whether or not to move forward.”