Hoover Council President upset after Alabama Senate HB573

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Hoover City Council President Jack Wright lashed out Friday, May 22, after the Alabama State Senate passed a tax bill he says is unfair to city schools.

Wright says the bill reallocates much of the one-cent Jefferson County sales tax passed in 2004 originally intended to pay off school bonds, to other uses including what he calls "legislative pork" spending.

The bill, HB573, passed the Senate 24-2. Last week it was overwhelmingly approved by the Alabama House. The bill awaits Gov. Robert Bentley’s signature to become law.

A link to the bill is here: legiscan.com.

Under the plan, the $560 million left to be repaid from the $1 billion in bonds used to finance $1 billion in new school construction across Jefferson County would instead be refinanced over 30 years. The debt was originally earmarked to be paid off the remaining in 14 years.

Wright blasted the plan during the May 18 council meeting, claiming the City of Hoover generates $20 million from the one-cent sales tax in Jefferson County, but would only get $2.4 million for city schools.

“They (lawmakers) have basically taken a tax that was created for school construction and was to expire in 14 years and converted it to other uses,” Wright said. “They did a good job of selling it to the public. We were a day late and a dollar short in speaking out against it.”

Jefferson County Manager Tony Petelos told the Hoover school board during its May 11 meeting that refinancing the debt would generate $65 million a year, allowing the county to resume many services that were cut after the Jefferson County occupational tax was eliminated.

Petelos said Hoover City Schools would receive $2.4 million annually from the reallocation plan and other school systems across Jefferson County would receive money based on student size. During that meeting, Hoover School Board Member Craig Kelley spoke out against the plan, saying Hoover wouldn’t receive its fair share based on the sales tax revenue generated by the city.

 Kelley, in an interview after the bill passed the Senate, said his biggest issue with the new legislation is how it caps the amount of money going to Jefferson County schools at $18 million annually.

“If Jefferson County does attract new industry, why would the schools not share in the increased revenue [from sales taxes]?” Kelley asked.

Kelley said he is also concerned that will allow county lawmakers to spend “pork money” at their discretion. Under the bill, members of the Jefferson County legislative delegation will get $3.6 million a year to spend in their districts as they see fit.

Wright spoke out against that issue again today.

“Over 30 years, that adds up to $105 million in taxpayer money legislators will be able to direct to themselves for uses they choose,” Wright said. “That’s re-election money.”

Petelos, in his talk to the school board, said Hoover would reap benefits from the bill. Jefferson County would be able to resume road improvements cut off after the county lost the tax, he said. He said the Jefferson County bankruptcy and loss of the occupational tax has hampered the county, and this bill would be a major boost for the entire county.

After bond debt payments, here’s a breakdown of how the money generated from the tax will be spent:

Up to $36.3 million to the Jefferson County general fund. The county commission will determine how the money is spent.

A new Sales Tax Fund will be created with up to $18 million a year to be allocated to Jefferson County public schools in amounts based on student size.

Up to $3.6 million to a newly created Jefferson County Community Services Fund for use by county legislator for spending in their district. A four-member committee appointed by county lawmakers will approve that spending.

Up to $2 million a year to the Birmingham-Jefferson Transit Authority for 10 years, then down to $1 million annually after that.

Up to $500,000 annually to be given to the Birmingham Zoo.

Any money left over will go the Jefferson County General Fund.