'This Vote Was for Home Rule': Montgomery Mayor Calls out Legislature Over Occupational Tax
A bill working its way through the Alabama Legislature seeks to limit city governments' use of occupational taxes to address revenue shortfalls. Mayor Steven Reed joins nine other mayors from the state in opposition, arguing that public safety services in particular would be hindered.
By Sara MacNeil
MONTGOMERY, Al. -- The occupational license fee is more about a battle for power than it is about taxing workers, city officials have repeated since the ordinance for the fee was introduced.
Mayor Steven Reed talked about historical and unprecedented legislative overreach at a press conference Wednesday, a day after the Montgomery City Council voted 5-3 to deduct 1% from the paychecks of all people who work in Montgomery beginning in 2021.
"That was not for an occupational tax. The vote was for home rule," Reed said.
Also on Tuesday, the Senate Governmental Affairs committee passed House Bill 147 by a vote of 8-2. If the bill passes the Senate and is signed into law by Gov. Kay Ivey, HB 147 would prevent cities from passing an occupational tax without permission from the Legislature. The bill, introduced by Rep. Chris Sells, R-Greenville, would not repeal occupational taxes that were implemented by Alabama cities before Feb. 1.
Our opposition to the bill extends beyond a ban on new occupational taxes. We are opposed to the assault on local governance," an open letter to the Alabama Legislature from 10 mayors in the state reads.
Reed said state leaders should be focused on state deficiencies and listed some of the challenges, including funds for mental health for example. With so many obstacles the state of Alabama faces, Reed said he was surprised a bill to prevent cities from passing an occupational tax would be the first item considered this legislative session -- without discussion with the mayor or City Council about alternative options.
"Maybe they want us to be handicapped by the same things that keep them from making decisions," Reed said.
The city will continue working to stop HB 147 from passing to prevent setting a precedence of legislative overreach, Reed said.
Reed said the city needs to address revenue shortfall by implementing the occupational tax for community investment. The city needs funds to increase salaries/resources for first-responders, support public schools, pave roads, service debt and redevelop community centers. Reed said public safety is the No. 1 priority.
This is how cities operate. This is how you get your trash picked up. This is how we pay police and firefighters. This is how we build community centers ... This is how we encourage revitalization, through revenue, through funds. That doesn't just happen because we pray about it," Reed said.
Reed compared the sales tax of 10% versus the 1% that will be deducted from paychecks for the occupational tax in 2021.
"We're talking about 1%. We're talking about a penny on the dollar so let's keep that in mind because no one who claims to care about taxes is talking about removing the taxes on groceries. No one who claims to care about taxes has mentioned putting a cap on sales tax and right now we have one of the highest sales tax in the state at 10%. That's one of the most regressive forms of taxes if there is one. That's criminal," Reed said.
Sells said he introduced the HB 147 for those who live outside of the city of Montgomery and commute to work here.
"Was his concern the same when he voted for the gas tax which was the largest increase in the state of Alabama's history?" Reed asked. "I don't remember him having that same concern. We pick and choose what we want to do and who we want to do it for. And, maybe the question is who was supporting that gas tax and maybe who's against this occupational tax. And, that may tell you the rest of the story right there."
Although revenue from the occupational tax will go into the general fund, the process of using those funds will be transparent and the city has been clear that the revenue will be for public safety, he said.
We have an open budget process. It is public, and we have made no bones about our priority behind public safety," Reed said.
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