A one-percentage-point increase to Mobile’s share of the sales tax, first billed as a temporary fix for budget problems back in 2010, is sticking around for at least three more years. The Mobile City Council voted 6-1 this week to extend the so-called penny sales tax through Sept. 30, 2018, marking the third time the increase has been renewed since it was first adopted.
The extension keeps the city’s portion of the sales tax at 5 cents on the dollar, pushing the combined city, county and state sales tax rate in Mobile to 10 percent, among the highest combined rates in the country, on par with Birmingham and Montgomery.
Finance Committee Chairman Joel Daves argued the roughly $32 million generated annually by the tax has become essential not just for growth initiatives but for the city’s basic financial stability. Under the extension, $22.5 million a year is earmarked for the city’s Capital Fund to cover infrastructure needs such as drainage improvements, sidewalks and road repairs, while another $5 million annually goes toward economic development incentives meant to attract new business investment to Mobile.
The three-year extension marks a notable departure from what Mobile Mayor Sandy Stimpson’s administration had floated. The mayor’s office had pushed for only a short, two-month extension of the tax, running from July through September 2015, tied to a planned increase in the city’s capital improvement spending for the coming fiscal year. Stimpson was not present for Tuesday’s vote, attending meetings in Washington, D.C. with other regional mayors regarding federal transportation funding and a proposed Interstate 10 bridge project.
Councilwoman Bess Rich cast the lone dissenting vote, saying she could have supported a shorter extension but objected to locking in a three-year commitment without more public discussion beforehand. Other council members countered that the extension had been discussed publicly for weeks and had been covered by local media outlets ahead of the vote, giving residents ample opportunity to weigh in before the meeting.
Council President Gina Gregory announced that Rich would lead a new committee examining broader tax reform options for the city, including possible changes to property taxes or a public referendum process for future sales tax decisions. Several council members pointed to specific infrastructure needs in their districts, from drainage repairs to road resurfacing, as justification for locking in the funding stream through 2018 rather than revisiting the question again in just a few months.