Northport Considers Changes To 1% Sales Tax Revenue Usage

NORTHPORT, AL. — The Northport City Council on Monday heard a first reading of changes to the plan for the city's usage of funds collected through its nearly year-old 1% sales tax increase, which will see money allocated to a wide range of highly-anticipated public projects and initiatives.

The tax was approved by the council last August and went into effect on Oct 1., 2019.

City Attorney Ron Davis explained the primary changes introduced Monday centered on merging certain components of the spending plan for efficiency, along with creating a separate account for the funds collected through the 1% increase.

The funding structure, originally introduced by former District 1 Councilman Tony Roberts, initially set up four categories or "buckets," as they are referred to, which will then be used as to allocate spending for specific projects.

Davis said, if approved on final reading at the next regular meeting on Oct. 5, the new structure will see the categories condensed to three total areas of spending. Citing limited options in Alabama for municipal bodies to generate revenue, the proposal points to a historic problem in Northport of underperforming in revenue generation compared to the cost of city operations.

According to the proposal, sales tax makes up $9 million in revenue for the city, 60% of which comes from grocery sales.

Under the new proposal, the three new "buckets" will be Responsible, Economic and Community Enhancement and Enjoyment. The Responsible category saw a $2.5 million allocation in FY20 and is meant to address specific shortfalls in budget areas. There is no limit on the amount allocated from the yearly revenue increase in the category, according to the proposal.

The Economic and Community Enhancement bucket is intended to address city growth and improve a Northport identity, with a maximum 50% allocation from the revenue increase. This category, combining the past Identity bucket with the former Renew bucket, had a combined allocation of $1,575,000 during the current fiscal year.

Development Coordinator Max Snyder pointed out one important change under the Responsible category that will see a $1.5 million allocation to the city's reserve fund to meet the 10% requirement.

Lastly, the Enjoyment bucket aims to address the outdoor activity funding in Northport and will have a maximum 50% allocation from the funds collected. The FY20 allocation for this category was $925,000.

Davis also said the separate account was being set up to better manage funds, saying money tends to filter away when it's placed in to the city's general fund.

"What it does, for example, if you spend $400,000 on paving this year, but you earmarked $1 million, then the remaining $600,000 would be placed in this separate account, earmarked for paving and striping," he said. "So you would have complete transparency for where this extra money went."

Snyder went down the list of ongoing and proposed projects funded in FY20 by the 1% sales tax revenue and said now that the city has a better understanding of how much money it will collect a little more than a year after it was passed, it's thought the city will easily hit the expected $5 million mark.

Following the presentation, members of the council voiced their support for steps taken to this point to ensure the money collected is not only spent wisely, but allocated efficiently to give taxpayers a more clear understanding of where their money is going.

"Some of the things that stand out to me is that we’re improving our streets and infrastructure, probably 30-40 years behind," said District 3 Councilman John Hinton, who serves on the council's Finance Committee. "We're improving our downtown shopping areas, improving our parks, making plans to enlarge our recreation opportunities for our citizens, improving our schools and many other things that you can see from this. These are the things that we said we would try to do with this money at the outset of this program and I think we’re right in line."

District 5 Councilman Jeff Hogg echoed the sentiment, saying that following last year's council vote to approve the tax hike, he was thankful to see the mayor and council stick by their word.

"There are a lot of things we do up here on a monthly basis that people don’t see or it's just formalities on some points, but these are the items that people actually see with their eyes in the public and I think this is what people are excited about," he said. "These projects here are what people want. With raising taxes last year to do this and to have that money set aside to spend only for these items, I think everyone will be happy with what we are doing and where we are going as we move forward."

Some of these more tangible projects include continued work on offerings such as a new sports complex and aquatic center, along with O.S. Harvey Park — a project with a $525,000 allocation in FY20 that will feature the addition of a splash pad, basketball courts, a parking pavilion and new playground equipment.

Outgoing Council President and District 2 Councilman Jay Logan said the city of Northport is in good financial shape to move forward with new projects after taking a "common sense, kitchen table, conservative approach" with its finances heading in to a new budget year.

"This will allow us throughout coming years to look at refinancing bonds at some point, wrapping those in some wrap-around financing to come back in savings to the citizens," he said. "So along the way, you will start seeing things we can do in our Finance Committee and Finance Department."