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Opinion | Online sales tax collection: What does this really mean for Alabama’s municipalities?

Frank Brocato

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The steady increase in online sales over the past decade has triggered an alarming shift in consumer purchasing habits from shopping at local brick and mortar establishments (which support community-owned businesses) to buying via remote sellers.

The significant decrease in local sales and use tax collections make it more difficult for Alabama’s municipalities to provide basic services such as police and fire protection, road resurfacing, solid waste collection and disposal, educational funding and other essential services.

In fact, according to data from Adobe Digital Insights, which tracks 80 percent of online spending at America’s 100 largest retail websites, American shoppers spent a record $6.22 billion in 24 hours during Black Friday in 2018, which marks a 23.6 percent increase in dollars spent online compared with Black Friday 2017. The Friday after Thanksgiving this year was also the first day in history to see more than $2 billion in sales stemming from smartphones according to Adobe.

What is SSUT and how does it need to be adjusted?

In 2016, the State passed the Simplified Sellers Use Tax (SSUT) to allow sellers to voluntarily pay tax on sales that would otherwise be outside the municipal taxing authority under current law.

In 2018, the Alabama Legislature passed HB470 requiring marketplace facilitators – on-line malls – to collect and remit sales taxes from all vendors marketing their products through these platforms and limiting the sales tax collection discount for online retailers to one percent. HB 470 also enhanced the split of local governments’ SSUT revenues to 60 percent to cities and 40 percent to counties.

In an effort to address this increasingly challenging issue, the Alabama League of Municipalities formed an ongoing Digital Economy Task Force in 2017 to examine shifts in consumer shopping and develop solutions to prevent what could very well decimate our municipal budgets over the next few years. I am honored to serve on this task force and have participated in many SSUT discussions over the past year. Recognizing that there continues to be a discrepancy in sales tax rates between local brick and mortar and online sales, the League and we, as municipal officials representing our citizens, are now advocating for parity in the sales tax rates between local vendors and on-line retailers during the 2019 Legislative Session. We believe a nominal tax increase for online sales of 1% would lower the disadvantage to local stores, which are currently collecting and remitting more than online retailers, while adding millions of sales tax dollars back into our local economies. This will provide necessary tax revenue for police and fire protection

as well as the many quality of life services our citizens not only expect but demand.

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As the number of vendors remitting taxes via the SSUT portal increases, even with the 60/40 split between counties and municipalities, Hoover will continue to be at a disadvantage compared to its prominence in retail sales for the State of Alabama overall. Therefore, attempting to equalize the rates is definitely a positive step to making the playing field between online retailers and brick and mortar stores more equitable; however, the formula (by population) for tax distribution across municipalities should also be reconsidered by the Legislature. Making this change will increase the effectiveness of the SSUT in capturing the loss of revenues from online shopping for the City of Hoover as well as other municipal retail hubs throughout the state.

What does this mean for Alabama’s municipalities?

Speaking for my municipality, the increase in online retail sales has substantially impacted the City of Hoover’s sales tax collections. For the State of Alabama, in calendar year 2017, the Alabama Department of Revenue received over $66.7 million through its Simplified Sellers Use Tax (SSUT) program to be distributed to counties and municipalities across the state. During that time, Hoover represented 2.82 percent of the population formula for distribution and received only $471,400 of the total $16.7 million disbursement related to municipalities. However, Hoover represents a larger percent of retail sales compared with other municipalities in the state. Based on conservative 2012 census retail sales estimates, Hoover represents 5.14 percent of all retail sales across the state (compared with 2.82 percent of population). Thus, due to the SSUT formula being based on population, Hoover is collecting 45 percent less than if it was based on the estimated retail composition percentage.

In addition, if we applied the conservative 5.14 percent of all retail sales that Hoover represents to the SSUT calendar year 2017 tax basis of $834 million, it would represent $42.9 million of online sales applicable to Hoover, or $1.3 million in taxes (based on the 3 percent tax rate in effect during that time period). Under this scenario, Hoover is collecting only 37 percent of what would be due locally, when compared to the actual 2017 SSUT distribution. This differential for Hoover SSUT tax receipts will only increase due to the new requirement passed by the Alabama Legislature in Act 2018-539 that amends the Simplified Sellers Use Tax law.

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As of January 1, 2019, marketplace facilitators having sales made into Alabama through the marketplace of $250,000 or more are required to register, collect and remit all marketplace sales, including those of marketplace sellers, or report such sales to the Alabama Department of Revenue and provide customer notifications. This is a positive change for municipalities that will result in more revenue collections; however, the disparity for Hoover will be even greater as SSUT collections grow. Consequently, as dollars spent online increase, under the current distribution methods, Hoover will continue to experience less revenue collections through the SSUT portal than it would likewise receive from our brick and mortar stores.

As the Legislature considers modifications to the SSUT program and the ramifications of our society moving to online sales, we are hopeful our state lawmakers will also carefully consider additional formulas and data points that recognize current retail hubs around the state. I am confident that local and state leaders can identify a measure and distribution method that will treat all Alabama’s municipalities fairly.

 

Mayor Brocato began his career with the Hoover Fire Department in 1973. During that time, he became the first paramedic for Hoover. After 42 years of service, Mayor Brocato retired in 2015 as the Chief of Operations and Fire Marshal. He was sworn in as the 10th mayor of Hoover on November 7, 2016. He currently serves on the Alabama League of Municipalities’ Executive Committee and Digital Economy Task Force.

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Opinion | On the Nov. 3 ballot, vote “no” on proposed Amendment 1

Chris Christie

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(STOCK PHOTO)

On Nov. 3, 2020, all Alabama voters should vote “no” on proposed Amendment 1. Vote no on Amendment 1 because it could allow state law changes to disenfranchise citizens whom the Legislature does not want to vote. Because Amendment 1 has no practical purpose and because it opens the door to mischief, all voters are urged to vote no.

Currently, the Alabama Constitution provides that “Every citizen of the United States…” has the right to vote in the county where the voter resides. Amendment 1 would delete the word “every” before citizen and replace it with “only a” citizen.

In Alabama, the only United States citizens who cannot vote today are most citizens who have been convicted of a felony of moral turpitude. These felonies are specifically identified in Ala. Code 17-3-30.1.

Without Amendment 1, the Alabama Constitution now says who can vote: every citizen. If voters approve Amendment 1, the Alabama Constitution would only identify a group who cannot vote. With Amendment 1, we, the citizens of the United States in Alabama, thus would lose the state constitutional protection of our voting rights.

In Alabama, no individual who is not a United States citizens can vote in a governmental election. So, Amendment 1 has no impact on non-citizens in Alabama.

Perhaps the purpose of Amendment 1 could be to drive voter turnout of those who mistakenly fear non-citizens can vote. The only other purpose for Amendment 1 would be allowing future Alabama state legislation to disenfranchise groups of Alabama citizens whom a majority of the legislature does not want to vote.

In 2020, the ballots in Florida and Colorado have similar amendments on the ballots. As in Alabama, Citizens Voters, Inc., claims it is responsible for putting these amendments on the ballots in those states. While Citizens Voters’ name sounds like it is a good nonprofit, as a 501(c)(4), it has secret political donors. One cannot know who funds Citizen Voters and thus who is behind pushing these amendments with more than $8 million in dark money.

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According to Citizen Voter’s website, the stated reason for Amendment 1 is that some cities in several other states allow non-citizens to vote. My understanding is that such measures are rare and only apply to voting for local school boards.

And why would a local government’s deciding that non-citizens can vote for local school boards be a state constitutional problem? Isn’t the good government practice to allow local control of local issues? And again, this issue does not even exist in Alabama.

The bigger question, which makes Amendment 1’s danger plain to see, is why eliminate the language protectingevery citizen’s right to vote? For example, Amendment 1 could have proposed “Every citizen and only a citizen” instead of deleting “every” when adding “only a” citizen. Why not leave the every citizen language in the Alabama Constitution?

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Amendment 1 could allow Alabama new state legislation to disenfranchise some Alabama citizens. Such a change would probably violate federal law. But Alabama has often had voting laws that violated federal law until a lawsuit forced the state of Alabama not to enforce the illegal state voting law.  

The most recent similar law in Alabama might be 2011’s HB56, the anti-immigrant law. Both HB56 and Amendment 1 are Alabama state laws that out-of-state interests pushed on us. And HB56 has been largely blocked by federal courts after expensive lawsuits.

Alabama’s Nov. 3, 2020, ballot will have six constitutional amendments. On almost all ballots, Amendment 1 will be at the bottom right on the first page (front) of the ballot or will be at the top left on the second page (back) of the ballot.

Let’s keep in our state constitution our protection of every voters’ right to vote.

Based on Amendment 1’s having no practical benefit and its opening many opportunities for mischief, all Alabama voters are strongly urged to vote “no” on Amendment 1.

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Opinion | Amendment 4 is an opportunity to clean up the Alabama Constitution

Gerald Johnson and John Cochran

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(STOCK PHOTO)

The 1901 but current Alabama Constitution has been amended about 950 times, making it by far the world’s longest constitution. The amendments have riddled the Constitution with redundancies while maintaining language and provisions — for example, poll taxes — that reflect the racist intent of those who originally wrote it.

A recompilation will bring order to the amendments and remove obsolete language. While much of this language is no longer valid, the language is still in the document and has been noted and used by other states when competing with Alabama for economic growth opportunities.

The need for recompilation and cleaning of Alabama’s Constitution has been long recognized.

In 2019, the Legislature unanimously adopted legislation, Amendment 4, to provide for its recompilation. Amendment 4 on the Nov. 3 general election ballot will allow the non-partisan Legislative Reference Service to draft a recompiled and cleaned version of the Constitution for submission to the Legislature.

While Amendment 4 prohibits any substantive changes in the Constitution, the LRS will remove duplication, delete no longer legal provisions and racist language, thereby making our Constitution far more easily understood by all Alabama citizens.

Upon approval by the Legislature, the recompiled Constitution will be presented to Alabama voters in November 2022 for ratification.

Amendment 4 authorizes a non-partisan, broadly supported, non-controversial recompilation and much-needed, overdue cleaning up of our Constitution.

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On Nov. 3, 2020, vote “Yes” on Amendment 4 so the work can begin.

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Opinion | Auburn Student Center named for Harold Melton, first Auburn SGA president of color

Elizabeth Huntley and James Pratt

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Auburn University's Student Center (VIA AUBURN UNIVERSITY)

The year 1987 was a quiet one for elections across America but not at Auburn. That was the year Harold Melton, a student in international studies and Spanish, launched and won a campaign to become the first African American president of the Auburn Student Government Association, winning with more than 65 percent of the vote.

This was just the first of many important roles Harold Melton would play at Auburn and in an extraordinarily successful legal career in his home state of Georgia, where his colleagues on the Georgia Supreme Court elected him as chief justice.

Last week, the Auburn Board of Trustees unanimously named the Auburn student center for Justice Melton, the first building on campus that honors a person of color. The decision was reached as part of a larger effort to demonstrate Auburn’s commitment to diversity and inclusion.

In June, Auburn named two task forces to study diversity and inclusion issues. We co-chair the task force for the Auburn Board with our work taking place concurrently with that of a campus-based task force organized by President Jay Gogue. Other members of the Board task force are retired Army general Lloyd Austin, bank president Bob Dumas, former principal and educator Sarah B. Newton and Alabama Power executive Quentin P. Riggins.

These groups are embarking on a process that offers all Auburn stakeholders a voice, seeking input from students, faculty, staff, alumni, elected officials and more. It will include a fact-based review of Auburn’s past and present, and we will provide specific recommendations for the future.

We are committed to making real progress based on solid facts. Unlike other universities in the state, Auburn has a presence in all 67 counties through the Alabama Cooperative Extension System. Our review has included not only our campuses in Auburn and Montgomery but all properties across our state. To date, we have found no monuments or statues recognizing the history that has divided our country. We will continue our fact-finding mission with input from the academic and research community.

Our university and leadership are committed to doing the right thing, for the right reasons, at the right time. We believe now is the right time, and we are already seeing results.

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In addition to naming the student center for the Honorable Harold Melton, we have taken steps to highlight the significant role played by Harold Franklin, the student who integrated Auburn. We are working to enhance the historical marker that pays tribute to Mr. Franklin, and we are raising its visibility in campus tours as we pay homage to his contributions as our first African American student. Last month, we awarded Mr. Franklin, now 86 and with a Ph.D., a long-overdue master’s degree for the studies he completed at Auburn so many years ago.

We likewise endorsed a student-led initiative creating the National Pan-Hellenic Council Legacy Plaza, which will recognize the contributions of Black Greek organizations and African American culture on our campus.

In the coming months, Auburn men and women will work together to promote inclusion to further enhance our student experience and build on our strength through diversity. The results of this work will be seen and felt throughout the institution in how we recruit our students, provide scholarships and other financial support and ensure a culture of inclusion in all walks of university life.

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Our goal is to identify and implement substantive steps that will make a real difference at Auburn, impact our communities and stand the test of time.

Naming the student center for Justice Melton is but one example. In response to this decision, he said, “Auburn University has already given me everything I ever could have hoped for in a university and more. This honor is beyond my furthest imagination.”

Our job as leaders at Auburn is more than honoring the Harold Meltons and Harold Franklins who played a significant role in the history of our university. It is also to create an inclusive environment that serves our student body and to establish a lasting legacy where all members of the Auburn Family reach their fullest potential in their careers and in life.

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Opinion | Alabama lags behind the nation in Census participation with deadline nearing

Paul DeMarco

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(STOCK PHOTO)

The United States Census is starting to wind down around the country with a Sept. 30 deadline for the national population to be completed. However, a United States District Court has recently ruled that the date may be extended another 30 days to allow more time for the census to take place.

Regardless of the deadline, Alabama has work to do when it comes to the census.

To date, the national average for participation around the country has been almost 65 percent for the census.

Unfortunately, Alabama residents are providing data to the census at a lower percentage, around some 61 percent of the state population.

There is already concern among state leaders that if that number does not reach above 70 percent, then the state will lose a seat in Congress, a vote in the electoral college and millions of federal dollars that come to the state every year.

The percentage of participation has varied widely around the state, from a high of 76 percent in Shelby County to a low of 36 percent in neighboring Coosa County.

State leaders are making a final push to request Alabama residents fill out the census in the last month before it is closed.

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We will find out later this fall if Alabama passes the national average of participation in the census compared to other states to retain both its future representation and share of federal dollars.

In the meantime, Alabamians need to fill out their census forms.

The state is depending on it.

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