Editor:

It’s never easy taking an unpopular position and possibly alienating neighbors and friends — have no doubt, raising taxes is never popular. But leadership is being straight with the people, saying what you believe and doing your best to do the right thing. Anyone who actually examines the city’s finances will conclude a 2 percent sales tax is the right thing to do and may very possibly save Fairhope from bankruptcy. Citizens have suggested reasonable alternatives and those alternatives will be addressed below. First, it’s necessary to explain how the city reached this fiscal tipping point.

In brief, for years the city has been financing its operations by either 1) borrowing money in the form of bonds (we currently have a debt-load of $34 million); 2) raiding its reserve fund (actually we use it like an operating account and currently it has less than $2 million); or 3) transferring funds from the utilities fund, thereby neglecting to maintain equipment, sewer and gas lines and other infrastructure. This is a recipe for a fiscal and, in the case of utility lines and infrastructure, a physical disaster. As a newly elected official, I’m not sure how we got in this mess, but it’s time for action, not blame.

A response to the issues raised by citizens follows:

1) Cut the budget to the bare bones before initiating a sales tax.

Mayor Kant, who is responsible for submitting a budget, has told the City Council the city budget had been cut to the bare bones. However, during his recent State of the City address, the mayor revised his position and said more cuts can be made, but the council has yet to see those. The problem is major budget cuts take time, and we don’t have time. According to the city treasurer, a deficit for this fiscal year of a million dollars or more is entirely possible. Anyone who’s owned a business knows about the only way to substantially reduce a budget is to cut employees and their corresponding costs. If there are city employees who are dispensable, it is the mayor’s job to eliminate them. However, in cutting expenses, one must be careful not to cut the heart and soul of the enterprise. If we eliminate our flower beds and the people who plant them and eliminate our tree lights and the people who string them, we’ll be sacrificing the very thing that has allowed Fairhope to have a vibrant downtown district that attracts people from all over the world. The businesses would suffer, our residents would suffer and, in the end, we would become just another small Alabama town.

2) Don’t initiate a sales tax until the city does an outside audit.

Typically, an outside audit is done if there is suspicion of criminal activity. There haven’t been any such allegations so in view of the time an audit would take and the cost ($50,000-plus), it doesn’t make sense to spend the resources on it. The city’s books are audited annually. In fact, the city auditors admitted the revenue and expense lines crossed (with expenses exceeding revenue) in Fiscal Year 2008; this is a call to act.

3) Why does the city need a sales tax when it just raised water and sewer rates?

We are playing catch-up. Prior to the recent rate increase for the water and sewer services, these city utilities were projected to lose over $10 million in the next five years. The sewer rate study showed the sewer rate would need to be increased 40 percent just to cover the cost of the service provided. Currently, the 6,400 customers receiving electricity from Fairhope are paying a surcharge, which is a hidden tax. As Aaron Norris, former Fairhope Public Utility superintendent, recently pointed out, these citizens are carrying the remainder of the Fairhope citizens on their backs. A sales tax would have everyone contributing to Fairhope.

4) Sell the utilities so the City can become more solvent and pay down the debt.

Perhaps, some of the utilities should be sold. Certainly, the city should examine which, if any, utility should be sold, but the gas company would be the leading contender for sale for a number of reasons including: the natural gas service is not “mission critical,” it has a positive residual value and the city could continue to realize “gas” revenue through the institution of a franchise tax (which would be charged to the company providing the service).

5) Annexation and cutting fire and police protection services outside the city limits.

This is a good suggestion. The City Council should address this issue in the coming months. Unfortunately, even if approved by the Council, it can’t be done quickly enough to help us balance our budget this year.

6) Fairhope sales tax is against the “ideals” of the Fairhope founders, who believed in having only a single tax on the land.

Rightly or wrongly, that ideal went by the wayside decades ago. Fairhope residents have been paying state and county sales taxes for years.

7) A sales tax will hurt the downtown businesses.

Just the opposite may be true. By allowing the city to maintain the esthetics that attract shoppers to the area, downtown businesses will have a greater chance of success. Every time Fairhope residents shop in Daphne, Spanish Fort, or Gulf Shores, they are helping those towns beautify their streets and maintain their infrastructure by paying those cities’ sales tax (which are 2 percent or more). Currently, when outside residents come to shop in Fairhope, our citizens subsidize them. They pay nothing to help the city maintain itself. A sales tax is not a deciding factor in folk’s shopping preferences on the Eastern Shore, but the beauty of the shopping area is. Take away the beauty, take away the shoppers.

8) If the city’s in such dire financial straits, why did the council give the employees and itself a raise?

The current Council did not give itself a raise. In fact, it’s unconstitutional to do so. Further, the former council initiated the 4 percent raises. Eliminating this 4 percent raise would net just over $200,000 in savings for FY 2009, while giving each employee a two-week furlough between now and the end of FY 2009 (Sept. 30) would result in a savings of over $425,000. Not enough to help us through the current financial crisis, while obliterating employee morale. This is the least favorable option, but if the sales tax does not pass or if the mayor vetoes the sales tax,these options must be considered.

9) Health insurance premiums

If certain calculations are correct, the city could realize over $1.35 million by eliminating its employees’ free family health care. While this is certainly a significant savings, Fairhope stands to lose many of its best employees if such action is taken. Again, this is an option that should be considered only as a last resort.

The city’s shaky financial status is too glaring to ignore. This is not a situation where we have a choice between instituting a sales tax or cutting expenses. We must do both to be successful. Any tax must be accompanied with cost cutting measures based on reasoned and calculated financial decisions.

It should be noted the proposed tax will be accompanied by at least two other ordinances detailing how the tax will be used: reducing the transfer fees from the utility companies (in order to allow these companies to begin and maintain a scheduled maintenance program); and reviewing the need for the sales tax at the end of a three-year period.

When first proposed, the mayor told several of us that he would not oppose the tax. However, in his State of the City address, he clearly opposed the tax. If opposed to the tax, the mayor should veto it and let the citizens of Fairhope know how they are to pay for the current services through FY2009, maintain a true reserve account, make needed infrastructure improvements and replace all old and obsolete utility equipment before someone is injured or killed.

While the sales tax issue has caused much angst in the city, it also has shown the citizens of Fairhope to be a concerned and caring group. Regardless of what happens, let’s work together to make Fairhope a better place.

Place 5 Councilman