Pelham raises sales tax to 9 cents

The Pelham City Council voted unanimously on July 25 to raise the city's sales tax. (File)

The Pelham City Council voted unanimously on July 25 to raise the city’s sales tax. (File)

By NEAL WAGNER / City Editor

Pelham shoppers will begin paying 9 cents on the dollar in sales tax beginning on Sept. 1, after the Pelham City Council approved the tax increase during a July 25 special-called meeting.

Proceeds from the 1-cent sales tax increase will feed a Pelham education fund, which “shall be expended to support public education for the residents of Pelham, and for any other expenses deemed necessary for the support of the public schools located within the city limits of Pelham, as directed and appropriated by the City Council,” according to the ordinance.

With the increase, Pelham’s sales tax is now equal with neighboring cities such as Alabaster, Helena and Chelsea, all of which have raised their sales tax totals to 9 cents in the past few years.

City Council President Rick Hayes previously said the sales tax increase likely will generate between $4.8 million-$5 million per year for the education fund.

By going into effect in September, the tax increase will generate about $450,000 for the education fund before the city’s new fiscal year begins in October, Hayes said previously. September typically is a strong month for the city’s sales tax revenues, he said.

During the meeting, Pelham Mayor Gary Waters said he was “concerned” about raising the city’s sales tax for education, and called the council’s process “backwards.”

“You should devise the plan and then devise the funding stream, not devise the funding stream and then devise the plan,” Waters said. “I understand the need to generate revenue, but I think it’s kind of backwards.”

The council unanimously passed the tax increase without discussion during the meeting.

Although Pelham leaders originally considered eliminating discounts for business owners who file their sales taxes on time each month, the discounts will remain in effect in the new ordinance.

Through the discounts, businesses can save up to $400 each month on sales taxes by filing on time.

During a recent meeting with city business leaders, Hayes said he and other council members felt it was “not appropriate” to do away with the discounts right now.