On November 8, 2016, Blount County Citizens will have the opportunity to vote on a 1% countywide sales and use tax. In “Part 1” of this post, I’ll explain how the revenues would be spent if voters approve the tax. In “Part 2,” I’ll explain how sales taxes work, why they’re different in each city/town, how much revenue they produce, how current revenues are allocated, ect. I’ll try to explain as briefly as possible. Feel free to ask questions on Facebook, Twitter, or email. I’ll try to post the questions and answers as an update to this article in a week or two.
The proposed 1% sales and use tax will appear on ballots for the General Election on November 8, 2016, under the heading, “Moving Blount County Forward Initiative.” Vote “yes” for the tax, or “no” to oppose it.
The tax, if approved, is expected to generate about $3 million per year, beginning January 1, 2017.
The way tax revenues are to be allocated and how they may be spent is written into the law. So, if approved, the county commission does not have authority to change it. The only way the division and approved spending purposes could be changed is through approval of all three branches of state government, then another vote of Blount County citizens.
The allocation of revenues is as follows: First $50,000 to be divided equally among ISO-rated fire departments in Blount County. Of the remainder:
50% to county roads and bridges. This money can only be spent on materials and contracted paving / construction of county roads and bridges. The law specifically forbids spending on payroll and equipment purchases.
33.33% to the two education systems (Blount and Oneonta), divided per student population. This money can only be spent on capital improvements, such as athletic facilities or buildings, and technology for students.
16.67% to the municipalities in Blount County, divided per population. This money can only be spent in the same way as the county and education portions.
Regarding the $50,000 for fire departments, the requirement that the department be ISO-rated exists to ensure lower homeowners insurance rates for residents in the community. Having an ISO-rated fire department significantly affects insurance premiums. Currently, every department in the county is ISO-rated and would be included in the division of these funds.
With regard to the portion for county roads and bridges, it is important to note a couple of facts. Firstly, current funding appropriated to roads is derived from several revenue sources that are already allocated to roads and bridges. Those amounts would not be decreased due to the passage of this new tax. The new funding would add to the existing funding, and existing funding would continue to be allocated to roads and bridges.
Secondly, the new tax is specifically restricted to the large county roads that are monitored by the state and federal government. Some of the county’s current funding would be cut if these roads aren’t maintained to satisfactory conditions. These are generally more expensive to maintain, which prevents spending on smaller roads that are in much worse condition. If the new tax is approved, the existing funding will be freed up to be spent on the smaller roads because commissioners won’t have to worry about funding cuts.
With regard to the education portion of the tax, funding may only be spent on capital improvements or technology. Capital improvements are large projects that have a long life, such as a new lunchroom, roof, football stadium, lights for baseball fields, bathrooms, air condition systems, etc. Funding may also be spent on technology for students or classrooms, such as computers, software, or smart boards.
The municipal portion may only be spent in the same ways as the county and educational portions. The municipality may spend the funding on roads, or appropriate the money to its school for capital improvements or technology.
Sales and use taxes are common in Alabama, but not in all states. Some have much higher property taxes or other types of taxes, rather than sales taxes. The state imposes a 4% statewide sales tax. That applies in every county. So, if the county and city did not have a sales tax, buyers would still pay 4%, and all of it would be due the state. In Blount County, there is a 2% county sales tax, in addition to the 4% the state charges. That 2% is applied throughout the county, including inside city/town limits. The cities/towns do not receive any of the 2%. So, if a purchase is made in Oneonta, the county gets just as much tax revenue as if the same purchase were made outside city limits.
Of the 2% collected for the county, the first $50,000 is divided equally among the county’s fire departments. Of the remainder, 75% is due the Boards of Education (Blount and Oneonta). That money is divided among the two education systems per student population, which is updated each year to reflect actual enrollment. Since county taxes apply in Oneonta, this division ensures that its school system receives a fair portion of the revenues. The other 25%, which equates to a 0.5% tax rate, is due the county commission for general operations of county government.
Cities/towns can impose sales and use taxes, too. For example, Oneonta currently has a 3% tax rate. So, purchases made in that city charge 4% for the state, 2% for the county, and 3% for the city, for a total 9% rate on purchases in Oneonta. Locust Fork, which is much smaller, has a 1% tax rate, so 4% state, 2% county, 1% town, totals 7% charged on purchases in Locust Fork. If outside any city/town, rates would only include state and county taxes, which total 6%.
If a Blount County resident purchases groceries, clothing, or other retail items outside the county, the taxes paid support those other counties, rather than Blount. So, if you’re buying in Pinson, Springville, Arab, or Fultondale, it would be helpful to Blount County students, since education gets the majority of sales tax revenues, if you started making those purchases somewhere in Blount County. It doesn’t matter which city/town, because the money is divided per student population, not where the money is spent.
Total county sales and use tax revenues 2016, at 2%, are expected to be almost $6.4 million. That is appropriated as follows:
- $50,000 Fire Departments
- $4,048,125 Blount County Board of Education
- $714,375 Oneonta City Board of Education
- $1,587,500 Blount County Commission
I could go into greater detail about how taxes are categorized. For example, the Blount County sales and use tax rate on automobile purchases are only 0.5%, not 2%, because those fall in a different category. If you want to know more about sales tax categories, or more about anything I’ve discussed in this post, let me know.