CULLMAN — Several mayors and town councils representing Cullman County’s smaller municipalities have begun a campaign calling for a top-to-bottom legislative revision of the county’s existing sales tax disbursement structure.

It’s a proposed change that would redistribute sales tax revenues to each of the county’s 12 local governments — including the City of Cullman and the Cullman County Commission — using Census-based population percentages to determine how much money each town would receive.

Currently, of the 8.5 cents (9 cents in the City of Cullman) in sales taxes collected for every retail dollar spent in Cullman County, the State of Alabama receives 4 cents; local school systems receive 1.5 cents.

The remaining three cents (3.5 cents in the City of Cullman) are apportioned to the county’s 12 local governments, including the county commission, according to varied formulae set forth in a series of legislative acts passed in 1975, 1981 and 1993, on the initiative of local legislative delegations of the time.

That system has channeled the lion’s share of locally-collected sales taxes back to the City of Cullman, but still not at a rate commensurate with what the city could claim for itself if it kept all the sales tax it generates. The city’s already sharing some of the revenues it produces with the rest of the county’s towns; the new plan just asks that it share more — a lot more.

Cullman’s accounting staff ran the numbers for how a population-based tax distribution law might work, and the result only had one clear financial gainer — the county commission. The commission could expect annual revenue gains in excess of $8 million under the new formula, while the City of Cullman would absorb a crushing $8 million loss.

Using the same formula, every other municipality in the county would also lose annual funds, with Hanceville likely seeing the greatest yearly loss — around $55,000 — and Colony suffering the least, losing only around $5,000 a year.

Asking the county’s biggest municipal economic engine to spread its wealth around to such a great extent is a topic supporters of the new proposal acknowledge, but it doesn’t deter them from moving forward — with caution.

“I’m the last guy who would want to, and there’s nobody out there wanting to start war of any kind with the city,” said West Point Mayor Kenneth Kilgo, who has worked with other mayors to put the plan together.

“But, based on the per-capita; per citizen, the City of Cullman — while it constitutes about 18 percent of the population of Cullman County — they actually receive about 60 percent of the tax dollars. What we’re working with is by no means final, and there’s a lot that we’re still going to have to figure out and go over pretty carefully, but we’re going to ask the legislature to go back and take a look at everything again.”

The argument small-town mayors such as Holly Pond’s Herman Nail use in promoting the new tax structure goes like this:

‰ There are 11 municipalities, plus one county government, all receiving sales tax revenues in Cullman County. The county’s total population, as of the 2010 Census, is 80,406.

‰ Including the City of Cullman, the county’s total municipal population (Cullman, along with the 10 other municipalities) stands at 24,563. The city of Cullman’s population is 14,775 — 60 percent of the total municipal figure. The remaining towns have a combined population of 9,788 — 40 percent of the total.

‰ Under the current sales tax apportionment system — that is, under the three older laws that, together, prescribe how sales taxes are currently distributed — the City of Cullman receives a higher per-capita dollar share of sales tax revenues than its municipal counterparts in the rest of the county.

Using the month of December 2011 as a benchmark period, the City of Cullman received $69.82 in sales tax revenues for each of its citizens, while the other municipalities received an average of $30.82 per citizen. The balance of unincorporated Cullman County, which falls under the funding of the Cullman County Commission, received even less.

‰ Municipalities besides Cullman also have projects and ongoing needs that require adequate funding; supporters of the population-based plan argue their towns’ funding should flow in at the same rate as it does in the City of Cullman.

These points are all listed in a boilerplate resolution Holly Pond mayor Nail has presented to other towns’ mayors and councils, asking that they add their names to the document and pass it in regular meetings.

At least two towns — Hanceville and Dodge City — already have done so; officials at Baileyton, Holly Pond and West Point have indicated they are likely to pass the resolution, or something similar, at their next regular meetings.

In addition to Herman Nail, some other local mayors said they favor the measure — none more emphatically, or briefly, than Mayor Johnny Dyar of Baileyton.

"I'm for it 100 percent," said Dyar. "We're going to look at it at the [town council] meeting next month. I haven't talked to them [the town council]; I don't know if they're for it or not — but I am."

Even though the Hanceville city council gave its assent to the proposal by passing its own resolution two weeks ago, Mayor Kenneth Nail said the situation isn’t as simple as some might think.

“I could understand that our friends in Cullman don't want to see a change in it, I'm sure, but I do think the mayors have a legitimate concern because we're all pressed for revenues,” said Nail.

“I do understand the City of Cullman’s side of it, too — and to my knowledge, nobody going forward with this is mad; I haven’t heard anybody say they were mad as a reason they’re doing this. We are going to be very professional about it. We just want the legislature to take a real hard look at it.”

While a loose consensus favoring a revision of current tax distribution seems to exist among most of the county's municipal mayors, not every town leader has gone on record to support a change in the local tax structure.

"We're supposed to be doing a resolution for it," said Colony Mayor Morris Fitts last week. "I haven't gotten the full details on that yet, so I haven't gone over it or made my own opinion about it. Mayor Nail at Holly Pond is supposed to come out and talk to the council about it and go over it all. Right now that's all I know."

Good Hope Mayor Corey Harbison was reticent in talking about the proposal, saying simply that he, along with the city council, aren't ready to support the proposal as it now stands.

"Based on what we have at this time, I do not think the council is ready to pass this resolution," he said Friday. “Before we start asking that something like this be changed, we need to be sure that what we’re asking for is actually beneficial to Good Hope, and to everyone else who’s going to have to be involved. I’m not sure we’ve seen that, up to this point.”

In addition to carrying local political implications that could prove divisive, if not downright acrimonious, backers of the population-based tax plan confess it also doesn’t account for some other near-term possibilities that could leech revenues away from their towns, if the current proposal ever succeeds.

For example, because the proposal relies on the splitting of tax revenues 12 ways among the county’s 12 existing governments, it doesn’t take into account a future scenario in which that 12-way split could become a 14 - or 15- way split, if two or three new small towns incorporate and begin receiving their cut — a cut that chips away at the money other towns receive.

“That’s a good question; it really is,” said Kilgo. “It’s something that could happen, and it’s something we’ll have to consider while we’re going back over what we’ve got.”

And, some towns with a comparatively active retail culture, such as Cullman or Dodge City, might stand to gain by offering their own alternative piece of ‘fair-minded’ legislation — one that allows each town to keep the sales tax revenues it generates, without having to share with other towns.

House Rep. Mac Buttram said he’s receptive to a discussion about the proposal, as well as to a revisiting of the three legislative acts that form the basis for the existing tax apportionment. But he noted the City of Cullman already brings in the vast majority of the entire county’s sales tax revenues, and that it’s already sharing the revenues it generates with other local governments.

“I’m interested in looking at and evaluating it to see if there’s inequality, and to see what we need to do to rectify it, if there is,” said Buttram Saturday. “But as I understand [the proposal], the county commission would become the most powerful entity in the county. Cullman city collects the greatest share of all the tax revenues in Cullman County. I represent the city and the county, and I want it to be fair. If changes need to be made, then we do need to assess what those might be, and work with everyone as we go over how it would change.”

Neither Buttram nor Sen. Paul Bussman said they’ve yet been approached by a municipality with a formal request to introduce new legislation that would change the current distribution of any taxes.

Kilgo said his support for any future legislation on the matter would be contingent on having any changes approved by voter referendum. And, he added, none of the current tax discussion represents a move to introduce new taxes — only to revise how current taxes are disbursed.

It’s a complex issue, and any proposed change would take a lot of deliberate discussion and a lot of time to implement, said Buttram.

“I don’t think anything’s happening quickly on that,” he said. “I think, if we begin to reassess it with the intent of change, it’s a process that would take a lot of input.”



* Benjamin Bullard can be reached by e-mail at bbullard@cullmantimes.com or by telephone at 734-2131 ext. 270.