Alabaster may lock in sales tax to BOE for 30 years

The Alabaster City Council likely will hold a public hearing and likely will vote on locking in a 2011 sales tax increase for 30 years. (File)

The Alabaster City Council will hold a public hearing and likely will vote on locking in a 2011 sales tax increase for 30 years during its June 23 meeting. (File)

By NEAL WAGNER / Managing Editor

The Alabaster City Council likely will decide during its June 23 meeting if it will pledge the city’s 2011 sales tax increase to the city’s school system for the next 30 years, council members said during a June 5 work session.

City Council President Scott Brakefield said school system leaders are seeking the pledge to help the school system secure a $120 million bond issue to construct a new high school and make significant renovations to Alabaster’s existing school buildings.

The bond also will be used to pay off the majority of the $15 million in existing debt the Alabaster City School System assumed when it separated from the Shelby County School System, said Alabaster City Attorney Jeff Brumlow.

“Because the school system is so new, that’s why it has to be guaranteed,” Brakefield said of pledging the sales tax increase. “This isn’t saying that it’s all going to the bond, but they need the 30-year pledge to be able to secure the bond.”

The City Council voted in 2011 to raise the city’s sales tax by 1 cent to feed an education fund for the city’s school system.

Currently, it would take a supermajority vote of the City Council to abolish the 2011 sales tax increase. If the council agrees to pledge the penny sales tax for 30 years, it will guarantee the tax will stay in place until 2044 regardless of future council action.

City Manager George Henry said it is unlikely the school system would be able to borrow $120 million without the city’s tax pledge, and said locking in the penny sales tax may factor in to Alabaster’s future bond ratings, based on a conversation he had with the rating agency.

“I’m asking you to just ask the questions and get data,” Henry told council members.

Mayor Marty Handlon said her “only concern” would be tying the 1-cent sales tax to debt.

“My fear is when you tie it to a debt for 30 years and something comes up, you don’t have a lot of wiggle room,” Handlon said.

Brakefield and council members Bob Hicks, Sophie Martin, Rick Walters and Tommy Ryals voiced support for locking in the penny sales tax for 30 years.

“When we made the decision to do that (tax increase), I am on record as saying the only reason I’m doing this is because I know 100 percent is going to the schools,” Martin said. “They’ve got their CSFO and they’ve got their board and I trust them to do what is right with that money.”

The June 23 City Council meeting will begin at 7 p.m. at the Alabaster Municipal Complex at 1953 Municipal Way. The council will hold a public hearing on the matter before voting on it.