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.