Mobile's sagging finances
How best to deal with $18.5 million shortfall
By Chip Drago
Mobile Bay Times
Like the would-be draft dodger studying his toes with gun in hand, leaders of the financially-strapped city of Mobile have lots of options -- none of them good.
They can cut, they can slash, they can shift and adjust. They can tax, they can charge, they can assess and they can layoff. Or any number of combinations.
In the end though, they have to make revenues meet expenditures or expenditures meet revenues. It's the law.
They may aim to please, but it's going to bloody hurt.
The default position for governments is new revenue because government grows; it doesn't shrink. Mayor Sam Jones may have proposed a 10-percent across-the-board city employee pay cut. The administration may rev up the chainsaw to re-shape the operating budget. Funds can be mixed, matched and/or transferred to comply with regulations.
As sage Councilman William Carroll says, "All things are possible." Well, maybe, but all things aren't likely.
What is most likely to occur to bridge the gulp-inducing $18.5 million divide between city revenues and expenditures?
City employees would protest pay cuts, long and loud, as the solving of a problem on their backs. They would be hotter than Tea Partiers at a Nancy Pelosi Appreciation Day. Residents would also howl at a new fee or a tax hike.
Smart money says city leaders ultimately -- after much wailing, gnashing, thrashing and alligator tears -- will create a new revenue source to fill the hole in the city's budget.
So what will it be? Time to pick your poison.
In the South, the sales tax has been the favored poison because "everyone pays it." For that reason, it has the least political backlash and
politicians are drawn to it
like moths to the flame or
more like the Sawyer family
to a distressed motorist on
a lonely highway in Texas.
A one percent sales tax in
Mobile's recent past has
generated $30 million
annually. If city fathers fly
that one past the dull Mobile taxpayers, well, in the backrooms of City Hall, the talk will be of Dom Perignon and Escalades. Laissez les bons temps rouler!
Should a dupe float a proposal to hike the sales tax by one percent so officials can shoot it down as over burdensome in these hard times? Then a one-half percent sales tax boost would sound like the reasonable compromise of caring leaders faced with a tough decision. Political heroes and statesmen in our very midst. $15 million would pretty well plug that budget hole which is about $14.4 million after shifting a $4 million mandatory reserve.
Stick a three-year sunset bow on the one-half percent sales tax hike and we may have the blue ribbon winner in Mobile's balance the budget competition. The tax would expire just in time for municipal elections in 2013. Do it all over again in the spring of 2014.
Then again, sales tax revenues in Mobile are trending down, much like the Titanic was trending down after its encounter with an iceberg. What is that economic truism: If you want less of something, just tax it?
Nevertheless, politically, a sales tax increase has its good and bad points and, overall, it may prove irresistible to those paid to make these decisions.
Number two of the revenue enhancing possibilities may be a monthly garbage collection fee. With City Council President Reggie Copeland's implied support, Carroll preliminarily proposed such a fee, starting at $15 a month, over 18 months as preferable to Jones' 10-percent employee pay cut. It, too, has its good and bad aspects politically.
The good: a fee for a service sounds fair. Other municipalities charge one. And, in fact, Mobile had one briefly in the mid-1990's to address a perceived financial need. Better still, the fee was installed as a temporary measure, which cynics scoffed at, and, lo, it was in fact withdrawn at the prescribed time.
The bad: What had once been "part of the service" becomes something extra that has to be paid for. A garbage collection fee is more noticeable than a small sales tax bump and, worse, folks get reminded once a month. Another negative is that not everyone would pay for it. There would be blanket exemptions for specific census tracts. Others outside those areas would be able to apply for an exemption, a process that would undoubtedly wear at least a light coat of alleged political favoritism. The Mobile Area Water and Sewer System would be asked to collect the fee. Of course, MAWSS billing is also something of a political advantage for the mayor and city council: Maybe MAWSS takes the blame, not City Hall.
Another possibly negative wrinkle: Could MAWSS legally turn off the water supply if a customer declined to pay the garbage fee?
Yet another hurdle is a law requiring that the fee cannot exceed the actual cost of the service. If city officials determine that a $15 fee is necessary to fill the gap in the budget, some accounting acrobatics may be required to align cost and fee. The fee and the cost of twice-a-week garbage collection 15 years ago was set at about $4 and now pick-up is once a week. Presumably one of the reasons for the shift to once-a-week service was reduced costs.
How about a fee for trash pick-up? Mobile, reportedly, is unusual, if not singular, in its twice a month trash pick-up at no additional charge to city residents. Apparently, or so the story goes, Mobile started picking up trash in the wake of 1979's Hurricane Frederic and never stopped.
The good: Same as with a garbage collection fee. A specific service for a specific price.
The bad: Again, an outside agency would probably have to collect it unless property taxes could be adjusted to reflect this added value with the additional revenues then remitted to the city. Scofflaws would be more numerous than with the garbage collection fee. With derelict washers and old refrigerators piling up along the roadsides, Keep Mobile Beautiful might partner with the National Rifle Association to advance the causes of both in policing the situation.
A city income tax? It's done wonders for Birmingham or maybe not. The good? It would satisfy the itch of some to even the score with folks who work in Mobile but live on the Eastern Shore or in Semmes, Saraland or south Mobile County. There are too many "bads" to mention them all, but foremost is probably one referring back to the dictum: If you want less of something, just tax it. The last thing Mobile wants or needs less of is jobs.
With that in mind, what does Mobile have a lot of but wants less of? Tax that. Kill two birds with one shot. Mail your suggestions to City Hall.
Elected officials are not great risk-takers as a rule. It is most likely that Mobile shoppers are in for a one-half percent sales tax increase with a sunset provision. The runner-up is a garbage collection fee.
Now, if this were happening last year, with an election looming just months away, all bets would be off. Layoffs would then have been among the front-runners.
But it didn't happen less year.
Government by crisis this year or politician in crisis last year, which is preferable? That may depend on who is answering the question.
Must revenue be found to meet expenditures or could expenditures be managed to fit revenue?
Could it be true, to paraphrase one wag's conclusion of the truant with his saggy pants, "There ain't nothing wrong with city of Mobile finances that a little self-discipline and a tighter belt couldn't fix."
Hmmmm, saggy pants. Seeing too much of something Mobile would like to see less of? A saggy pants tax?
But government would probably eliminate the sag by getting rid of the pants.