City sales tax up in December

After getting a better sales tax report for December, the Monroeville City Council agreed not to consider further reductions in operating costs during Tuesday night’s work session in the council chambers at City Hall.

Through the first quarter revenue was down 11 percent, but a rebound in the sales tax collection for December reduced the total revenue difference from 11 to 7 percent, according to City Clerk Toni McKelvey.

McKelvey reported the city has collected $25,000 less from Alabama Power Company for franchise fees than what was budgeted for this year because the franchise fees are based on electricity sells. She said most of the reduction in franchise fees is due to the idling of Harrigan Lumber and the closing of the Vanity Fair dye house and other business and industry using less electricity. The city received about $500,000 in franchise fees last year from Alabama Power.

McKelvey said other revenue areas that she is projecting to end the year under budget are: sanitation, $21,000; business licenses, $5,000; and, sales taxes, $181,500 if the sales tax collection remains off 7 percent.

She said since the city increased the sales tax budget $31,700 from FY2009 to FY2010, if the present sales tax trend holds, the city would have a shortfall of $213,200 in sales tax revenue. FY2010 began Oct. 1, 2009 and ends Sept. 30, 2010.

McKelvey said in December the city did collect about $20,000 in sales tax revenue over what it collected in December 2009 and this year’s revenue from building permits is up $11,000 over budget and may continue to increase as the year progresses.

Mayor Mike Kennedy said he and the council hope the sales tax revenue from several businesses at Ollie that have asked to be annexed into the city along with the back taxes owed by Georgia Pacific will help balance the budget.

Kennedy said the annexation bill has been approved by the State House of Representatives, according to Rep. Harry Shiver of Bay Minette, and Sen. Hank Sanders of Selma plans to introduce the bill in the Senate.

Among the properties to be annexed are The Minute Stop, DJ’s Family Restaurant, Huddle House, Old Mexico, David’s Catfish and Lee Motor Company’s Used Cars.

McKelvey said from March 1, 2009 to Sept. 30, 2009, the businesses paid $39,000 in sales tax to the county.

“One thing you (council) should consider is you may pick up a little more sales tax from the sale of alcohol (by some of the businesses at Ollie), but I think that everyone who would buy alcohol is already buying it here,” she said. “It’s probably just going to move the sales tax dollars around.”

Councilman Joseph Oglesby said the restaurants that choose to serve alcohol on the premises may see an increase in sales, which would translate in an increase in tax revenue for the city. Councilman Tom Lomenick agreed.

McKelvey said there is also the possibility that new sales tax dollars could be generated by people passing through the county on U.S. Highway 84, who stop at the stores and buy an alcoholic beverage, which hasn’t been available before.

McKelvey said if the city picks up at least $39,000 in sales tax from the Ollie businesses from March through September and it gets the back taxes from Georgia Pacific, the city will only have a shortfall of $68,200 in sales tax revenue over what was budgeted. She said if the sales tax trend improves the shortfall would be even less.

Lomenick, who is employed by Stuart-Irby, an electrical supply company on Hornady Drive, said the company saw an increase in sales in January. He said other businessmen in Monroeville have told him they also had a good January.

“We’re seeing that trend in the business we (Stuart-Irby) do in Thomasville and everywhere else, also,” he said. “My question is if we continue as is without asking the departments to reduce their expenses, can we hold out until March or April.”

He said if the city can wait until April, the council would have a chance to re-evaluate the sales taxes and see how the annexed businesses are doing.

McKelvey said yes and she would not recommend the council consider making any budget adjustments at this time.

“If you (council) do anything I would just convey to the department heads that if they don’t have to have it, don’t buy it,” said McKelvey. “If you have to go back and make cuts, the only place left to cut is in labor costs.”

She suggested that instead of getting money from the General Fund when department heads ask for budget amendments, the department heads should be asked to see if they use the money they were budgeted first.

“I sign purchase orders everyday and I see some stuff on there (purchase orders) and I think it’s Christmas time,” she said.

Kennedy said he would make sure the department heads understand they are not to buy anything that is not an absolute necessity.