The North Mobile Post

    The penny sales tax that Mobile’s city council voted into law earlier this year will come into effect starting tomorrow. The tax increase brings Mobile’s sales tax to 10%. The increase is set to net the city an additional $2.5 million per month according to WKRG News 5. Prior to the passage of the tax increase, Mobile was facing a massive budget shortfall. The city council was forced to choose between sharp spending cuts, or the tax increase.

    Spending cuts would have meant less police and firefighters on the streets. While a majority of the city council were initially against the tax increase, the measure eventually won out as the spending cuts were viewed as to harmful to the city. With Airbus coming, Austal expanding, and the future looking bright for Mobile, the council ultimately decided that now was not the time to cut back on city services.

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    With the city of Mobile facing a large budget deficit, there were concerns that the city would not be able to afford its fireworks display on the fourth of July. Today, the council voted 6-0 to go ahead with the celebration. Mayor Sam Jones told Fox 10 News that the city got a deal on the fireworks. The original cost was $18,000, but the city is now getting the goods for just $3600.

    The fireworks are not the only cost associated with putting on a big event. Police have to work overtime to cover the celebration. That overtime will cost the city around $25,000.

    These type of problems will continue to arise until the city gets its finances in order. A closer look at the books recently revealed that the city’s deficit was close to $15 million. That is significantly lower than the initially reported $25 million shortfall. The number is still to high, and either budget cuts or a sales tax increase must be put in place to solve the problem.

    This is the second straight year the fireworks display has been in jeopardy. Last year, drought conditions almost forced the city to call off the display for fear of starting wildfires. To comply with the burn ban, the city launched the fireworks from a barge anchored in the bay over the open water. The type of ingenuity would help out tremendously on the city’s budget woes.

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    On Thursday, Mobile finance director Barbara Malkove revealed that Mobile’s budget deficit was actually between $11 million and $14 million. Original estimates had put the deficit at $29 million. The new figures will make it a lot easier for the city to balance its books. This is the second straight year the city has faced a major deficit.

    There has been a battle between Mayor Sam Jones and the city council over how to bridge the gap in the budget. The mayor would like to see a temporary sales tax increase to fill the void. A sales tax was used last year to handle the deficit, but the council is not willing to repeat the method. Instead, the council would like to see budget cuts to offset the negative numbers.

    Jones has said that if cuts were to be used to handle the problem, then city workers would have to be laid off, and police officers would not get any overtime. Now that the budget deficit is not as big as originally thought, the city government may be able to make some less painful cuts to balance the budget. One idea being floated by the council is forcing city employees to pay a little more into their insurance programs.

    There is definitely room for improvement in how the city handles its workers. Making all of the changes in cuts is not a solution that will work every time, as we can not continually gut the benefits of public sector workers. Eventually a temporary sales tax will likely be needed. In the long run, the city needs to do more to promote business and investment in downtown Mobile if they are to solve the city’s long term budget woes.

    Mobile is a city with vast untapped potential. If the city is to unleash that economic potential, it is going to take some investment from the city government. As any wise investor will tell you, you have to spend money to make money. The city needs more cops on the streets, not less. Mobile needs more city workers keeping the area clean, and attractive to potential customers. The city also needs to keep rules for opening new businesses simply to attract entrepreneurs. Only then will they be able to expand the tax base and fix the crippling budget problems that face the city by the bay.

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    Negotiations have been on going in Mobile to try and fill the cities $29 million budget hole. Mayor Sam Jones is still pushing the 1 cent sales tax as the best option. He claims that without new revenue the city will have to undergo across the board cuts on April 1. That would mean cutting overtime for police and firefighters among other painful cuts. He has also said they could stop providing power to lights at city parks at night, something that has caused a bit of an uproar within the community.

    The city council is looking to make cuts in other areas to fill the budget hole. Councilwoman Gina Gregory, who many may remember from her years at WKRG News 5, sent a letter to the mayor with a list of ideas for fixing the budget mess. The councilwoman recommended cutting public works employees and garbage services and privatizing the services. She also floated the idea of the city selling the Mobile Civic Center.

    Time is running out for Mobile to fix this problem. Austerity measures are usually not a good idea when the economy is extremely fragile. In the short run a 1 cent sales tax may be the best way to solve the problem. In the long run Mobile must do more to grow economically. Only then will its budget problem be stabilized.

    There are signs the city is moving in the right direction, albeit slowly. The addition of the Moon Pie drop on New Year’s Eve proved to be a big boost economically to the city. There has been talk of turning Three Mile Creek into a river walk park. That would be a great idea for downtown Mobile and could provide a much needed economic boost.

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    The city of Mobile is facing a $27 million budget gap this year. Mayor Sam Jones is pushing a temporary one cent sales tax to fill the gap. The alternative is cuts to city services and laying off city workers. The city has previously used a penny sales tax. From June 2010 to September 2011 a penny sales tax was implemented to handle a similar budget situation and generated $25 million in revenue.

    The city council was resistant to the idea the last time around, but eventually passed the measure and disaster was averted. This time may be different. Local 15 News is reporting that councilman John Williams is opposed to the measure and believes the city council will not pass it. Williams wants the mayor to scale back government and cut spending.

    Most economists argue that you should not cut spending in a recession. Mayor Jones has stated that up to 300 people could lose their job if some revenue is not raised to fill the budget gap. A one cent sales tax seems like the logical choice now, but Mobile has a long term problem that must be dealt with.

    Mobile is a city with vast untapped potential. We now have an empty cruise terminal that the city should be working night and day to refill. There are several vacant buildings downtown that would be perfect for new businesses. If the city truly wants to solve its budget problems it needs to improve its tax revenue the old fashioned way: by growing the economy.

    Mobile has to do more to promote new businesses within city limits. The first step has to be cleaning up the streets of downtown. Several nightclubs have been shut down due to the violence that is prevalent downtown. These businesses may not be the perfect ideal of what we want downtown, but they did bring revenue to the city. If police officers have to be fired due to budget problems then the streets will only get worse.

    The city should try and create more major events downtown like Mardi Gras and Bayfest. These events generate tons of revenue for Mobile. Anytime that people pack the streets of downtown, the city is benefiting greatly. Tourism is an area where Mobile needs to improve.

    Given its problems, Mobile should take the lead in an area where most cities large and small struggle, and that is the difficulty put on entrepreneurs in opening a new business. You often hear politicians on cable news talk about the federal government getting in the way of business, but it is local government that is usually the biggest headache. Mobile should make it as easy as possible to open and run a new business. Entrepreneurs would be drawn to such a location.

    Raising taxes and spending cuts can solve problems short term, but they are bound to fail in the long run. Eventually both become punitive on the economy and you exacerbate the problem. Mobile needs to grow its way out of this dilemma. It has the capability, all it is lacking right now is the political will.