Sonny Brasfield, the executive director of the Association of County Commissions of Alabama, said the average citizen doesn’t understand how limited county governments are in funding, and that …
Sonny Brasfield, the executive director of the Association of County Commissions of Alabama, said the average citizen doesn’t understand how limited county governments are in funding, and that other commissions across the state are facing the same type of problems as Walker County that are forcing them to look at tax increases.
“The folks who are running the county commissions statewide are all facing the same pressures: How do you operate government on less and less money, because on the face of inflation, even if the money holds its own, it’s less money,” Brasfield said.
Brasfield was told that Walker has 2 cents of sales tax but that none of it goes to government operations.
“Just more than half of the counties get sales tax revenue into their general funds,” he said. “There is sales tax levied in the rural areas, but it is going to education or it is going to roads, but in terms of getting any substantial sales tax revenue — I used to say the norm is no, but now the norm is yes, but barely yes.”
Brasfield, who has been with the association in different leadership positions for 28 years, including nine years as executive director, spoke in a phone interview on Monday, March 20, in terms of how commissions are dealing with the strain on finances. Some are turning to sales taxes, such as the Walker County Commission, which is proposing a 1-cent increase in sales taxes. The local commission notes its current 2 cents in county sales tax goes to the Walker County and Jasper school boards, with nothing going to the general fund.
He said the general public may not recognize that money collected at a county courthouse does not stay in the courthouse.
“We are the most efficient level of government because, a., we’re the only level of government without the ability to raise revenue, which means we have to look for ways to be efficient, and, b., generally speaking, most counties live off ad valorem (property) taxes, a small portion of ad valorem tax. Then there are some counties with local sales tax, and then other than that there are a few shared taxes” coming from state taxes, Brasfield said.
As an example, counties get 25 percent from a “financial institutions excise tax,” or FIET, essentially a state tax on banks.
“Counties, generally speaking, are living on the same revenue that they had in the year 2000, minus the impact of the Great Recession in 2008 and 2009. Most counties are still struggling to get back to where they were prior to that event,” he said.
Brasfield said county operations across the state generally rely on property taxes as they are not allowed themselves to levy sales taxes. Any sales tax that comes to the county usually comes because of a special act in the Legislature, he said.
They usually do not receive any significant business license income. “The largest jewelry store in Walker County buys a $2 store license from the State of Alabama to be opened and the county gets half of that,” Brasfield said.
However, the City of Jasper will see sales tax and business licenses as their two largest sources of income, he said, noting how cities are structured “completely differently than counties.”
Brasfield was asked if commissions —both Democratic and Republican — are having a difficult time in the post-Reagan era by cutting taxes and waste extensively in order to please voters, while expenses continue to rise.
He said the fact of life is that the average taxpayer, no matter where they live in the nation, doesn’t understand all services offered on any level of government, be it county, state or city. The average citizen, he said, would likely say, “I don’t know the difference. All I know is how much money I am paying in taxes. And no matter how much that is, I think it is too much. And I really don’t know why all you government types can’t sort it out and move the money around.”
He said that viewpoint is a real problem that counties face.
“We as counties have to say, ‘We don’t get any of that money,’” Brasfield said. “From my perspective the revenue we receive today is not sufficient to provide services, while at the same time the public says, ‘Well, I’m already paying taxes on that.’ Well, we don’t get that. That’s not an argument that generally resonates with the public — the business gets a business license but we don’t get it.”
Brasfield noted it is easy to say one is not for higher taxes and government should be more efficient.
“When people say that to me, I say, ‘Give me an example.’ Generally, there is not one,” he said.
Public debt, which has played a major role in the Walker County situation, is a factor not only with the state but with a couple of counties now, as Brasfield says they are looking at raising revenue to pay for jails. The state has considered borrowing up to $800 million for its new jails.
He said the problem goes far beyond the bond issue to fund construction of a project, as a county also has to deal with the cost of the new project after it is constructed.
“It’s one thing to build something. It is another thing to operate it,” he said. “It is difficult from a public policy standpoint that you’ve got to have money to run it, and it is going to cost more to run something new.”
As for trends in counties asking to raise sales taxes, Brasfield said just before the phone interview that morning he had talked with officials from one county that was drafting a local bill later this session to be introduced to raise a sales tax to fund healthcare in the county. He said the tax would help in efforts to prevent closing a hospital in that county, which has a population much smaller than Walker’s.
He noted Blount County voted late last year to raise its sales tax by 1 cent, with 64 percent of the vote in favor.
Asked if it is better to earmark a tax to make the funds transparent in their use or to leave it unearmarked to provide for unseen emergencies, he answered, “Would it be best for me to be 5’9” and bald or would it be better for me to be 6’4” and good looking? The answer to that question is easy.”
Philosophically, it would be better to leave the funds unearmarked, he said, but state voters show they are willing to support additional revenue if they know what it will be spent on — and less likely if it is not.
“Being 6’4” and good looking would be better but I don’t think that’s sellable,” he said. “In a statewide perspective, (unearmarked) would be very difficult. Locally, you may be able to do that for one reason or another. Statewide, it is almost a non-starter.”
As for overlooked expenses, Brasfield said many people overlook that law enforcement is expensive as everyone wants to be safe and usually want to fund that. He said many jails and police cars are in dangerous condition.
In the end, he suggested the question is, in the wake of a possible referendum, “Is this the government that Walker County citizens want, or are they just not informed? If they become informed, will they support providing the services you need to move forward?”
“We made a choice in Alabama,” he said. “Government services at the state and local level are funded by either one of two things, either by ad valorem taxes or transaction taxes (such as sales taxes, gasoline taxes, tobacco taxes, alcohol taxes and business license fees). We made the choice to have the lowest ad valorem tax rates in the country, and we do. We have a very liberal current use provision, which is a whole different debate but that drives down the ad valorem tax revenue.
“By having low ad valorem rates, that doesn’t mean government costs less. That just means we have got to rely on transaction taxes to generate the money,” although he noted the state can also add income tax.
As a result, he said transaction taxes are “the only avenue to provide to citizens the services they need, and that’s just the bottom line.”