RBC mayor says revision to Jones' occupational tax bill a threat to megasite

Rainbow City Mayor Joe Taylor is unhappy with the latest twist in Sen. Andrew Jones’ efforts to rein in occupational license fees levied by his city and four others in Etowah County.

Jones' SB65 was approved on a 5-4 vote last week by the Senate’s County and Municipal Government Committee. It would cap occupational taxes at 1%, and require any municipality with a higher rate to reduce it by two-tenths of a percent annually until it hits 1%.

Twenty-five municipalities levy such taxes in Alabama, and five of the seven that have a higher rate than 1% are in Etowah County — Attalla, Gadsden, Glencoe, Rainbow City and Southside, each at 2%.

Should Jones' bill pass, Etowah County would be solely impacted by another section: Any county with two or more municipalities collecting more than a 1% occupational tax as of Jan. 1, 2023, would have to hold a referendum in 2028 on whether the tax should continue at all once the rate is reduced to 1%.

The Senate committee added an amendment to the bill specifying that no drawdown of occupational taxes would occur until the January after any indebtedness by a municipality that is encumbered by such taxes is paid off.

However, it’s another revision that has Taylor upset.

Jones’ original bill stipulated that occupational taxes couldn’t be levied in any property annexed into a municipality after Jan. 1, 2023. The revision changes that generic “property” to “property that is an industrial megasite of 1,000 or more acres.”

Taylor, who attended the Senate committee hearing on the legislation, sees that as a shot at Rainbow City. Last year, it reached a Memorandum of Understanding with the Etowah County Commission that it would eventually annex Etowah County’s 1,100-acre Northeast Alabama Regional Megasite, to provide infrastructure and basic services.

Taylor called the move a threat to “what would be the best economic development driver this area has seen in its history.”

With the occupational tax in place, Rainbow City would receive more revenue once companies are up and running, and employing workers, at the megasite. However, Taylor said county governments generally can’t provide the type of services and meet needs to the extent that cities can, such as fire and police protection, business code enforcement and parks and recreation offerings, which was the motivation for the proposed annexation.

Jones, R-Centre, said he’s “passionate” about Etowah County’s megasite, and worked to earmark local fee revenue for it and to amend the Growing Alabama Tax Credit to prioritize megasites in general, resulting in “millions of dollars” in investments.

He reiterated his belief that occupational taxes are a hindrance to economic development. “I want to see the megasite succeed, but I am confident that taxing prospective new jobs is not the way to ensure that success,” he said.

Taylor and the other county mayors whose cities levy the tax have disputed that; he again noted that Tuskegee, which has the highest occupational tax in the state at 3%, recently landed South Korean automotive supplier Samkee’s first U.S. plant.

Jones also pointed out that NEAR “was originally conceived as a county-wide site, not as a tax revenue land-grab for a nearby city.”

Rainbow City presently gets about $2.4 million a year from its occupational tax. Taylor reiterated what other mayors have been saying since Jones’ efforts became known: They can’t lose that money without it impacting the level of services they deliver to their cities’ residents.

Taylor said any economic growth “isn’t going to keep up with the drawdown,” adding, “All we can do is take a very reactive position that we’ll have to cut services.”

He said Rainbow City’s budget is already tight, and the city doesn’t spend an excessive amount of money on personnel, trying to make up for smaller salaries with better benefits.

But the reality, as Taylor sees it, is that the funding will have to be replaced from other sources, such as increased property taxes that would impact Rainbow City’s property owners — not just to maintain services, but to preserve the city’s bond rating.

“We have a double-A-plus bond rating because of prudent management,” he said, which could drop if the occupational tax money used for debt service goes away. “If we have the inability to borrow money, it will stymie our economic development.”

Jones called the threats of increased property taxes “an attempt to scare the taxpayers,” noting that Rainbow City increased its sales tax by 1% in December “despite the mayor stating that budgets were flush when he took over.”

Taylor accused Jones of trying to do an end run around the process by introducing what effectively is a local bill in the guise of a statewide bill, because he knows the rest of the county’s delegation won't provide the unanimous consent needed to bring a local bill to the floor.

He called Jones’ actions “a personal attack on his district” and “political grandstanding, because he wants to be seen as the senator who eliminated the occupational tax.” He said the senator agreeing to the amendment on occupational taxes encumbered for indebtedness — “which could take years” — shows he’s less serious about eliminating the tax than he is about gaining a victory.

“I don’t like taxes, period,” Taylor added. “But I like police and fire protection and paved streets a lot more than I dislike taxes.”

He said a senator during the committee hearing on the bill said people might not like Alabama’s tax system, “but it’s the way we do business.” Along those lines, Rainbow City’s occupational tax has been in place, and its proceeds have been a key part of the city’s budget, for more than 60 years.

“It’s taken us 60 years to get a senator ‘wise’ enough,” Taylor said, to think he knows better about how cities should conduct their business.

Jones said, “I'm here to work for the people of my district, not play politics,” and challenged Taylor to support a “simple solution” to the controversy: allowing the people of Etowah County vote on the issue.

This article originally appeared on The Gadsden Times: Rainbow City mayor again criticizes occupational tax bill