Sales tax

Public Safety dispatcher Anna Kelly answers a call at the Emergency Operations Center in April 2017. A once-detested decision to raise Dothan's sales tax by 1 cent has afforded the city the chance to implement several of the services that residents enjoy today.

In 2006, National Peanut Festival patrons pelted then-Mayor Pat Thomas with pennies as he walked the fairgrounds.

Stickers that parodied the American motto dotted downtown Dothan signs, denigrating the mayor.

The cause? Thomas led the charge to up the city’s sales tax to 4 cents – 9 cents total in Dothan with state and county taxes – in the months prior.

Commissioners passed the new levy on Sept. 19, 2006, with a 5-2 vote, much to the chagrin of people who love keeping the money they earn. The vote carried repercussions as two commissioners who supported the tax, Phillip Tidwell and Jason Rudd, who lost re-election bids in the following elections. Thomas opted not to run for a variety of reasons.

But ask anyone in city and business circles, and they will tell you the vote also produced amazing results for the City of Dothan. The days where city leaders borrowed money from the utility fund to pay the general fund payroll have disappeared, and the city no longer pursues loans to update its vehicle fleet.

James Oates Park and the new libraries may not exist without the revenue generated, and the city may have received hefty fines from the Environmental Protection Agency (EPA) without the capital needed to initiate major sewer system rehabilitation efforts.

Things may look – and operate – completely differently if four commissioners had not supported Thomas’ idea.

“The extra 1 percent brings in about $16 million a year, so it would impact what the city would be able to do as far as future capital projects, even being able to sustain maintenance on existing facilities, being able to be competitive in wages,” said Lisa Reeder, City of Dothan’s finance director.

“If we were short $16 million, we would be focused on our core service – what is it at a minimum that we have to do?” added Kevin Cowper, Dothan city manager. “We have to provide public safety and provide for the general health, safety and welfare of the community. The larger transportation projects, the parks and rec projects, the quality of life projects would very much suffer.”

Birth of the levy

Thomas served as a commissioner for two terms before deciding to run for mayor in 2005, and what he witnessed in the city government during those eight years shaped his platform.

“We had been in a save-money, cutback, do-more-with-less (mindset), and we had done that for eight years,” he said. “We were to the point that we had cut past the fat, and we were cutting into services. When I decided to run for mayor, I ran on the platform (that) we’re going to invest in ourselves. If a city’s going to be great, it’s got to invest in itself.”

“When I got here in 2004, the city purchased a new fleet in 2003 and had to borrow money to do so,” added Mike West, former Dothan city manager. “A city the size of Dothan shouldn’t have to do that.”

Thomas and other leaders evaluated several options for generating the funds like increasing electricity and water rates or instituting a garbage pickup fee for the first time. Leaders concluded all of the options outside a sales tax increase could generate $6 million per year – all on the shoulders of the Dothan residents.

Or they could raise the sales tax one cent, generate twice as much money and place some of that burden on people who worked locally and lived elsewhere or on the traffic that passes through on the way to Northwest Florida beaches.

Public outcry begged Thomas and other commissioners to abandon the idea, but conviction caused Thomas to carry out the idea.

“I held a citywide forum and gave everybody who wanted to a chance to speak, and there were probably 20 people that voiced opposition, and there were two that voiced support,” he said. “I wanted to build a better Dothan because I want my children to live in Dothan and I want my grandchildren to live in Dothan. They do. That is my personal measure of success.”

Fortuitous applications

On the strength of the logical argument Thomas created, four other commissioners – Tidwell, Rudd, Paul Lee and Taylor Barbaree – voted for the tax.

“We had a commission that was fearless. They were,” Thomas said. “The five guys, some of them didn’t get re-elected, but they did more for the citizens of Dothan than commissioners who have been elected multiple times.”

The decision proved to be a blessing in several ways shortly thereafter.

The city began collecting the extra cent on Jan. 1, 2007. Within the year, the nation’s economy had plunged into a deep recession.

West said the extra tax allowed the city to survive the recession with just a few adjustments to city operations.

“The tax allowed us to go through the recession with minimal impact,” he said. “The pay raise freeze allowed us to catch up on some things.”

“If you look back, the nation’s economy was crippled by the housing burst, but Dothan’s economy did OK,” Thomas said. “We did slow down with our investment in capital expansion. We just pulled back during that period, but we didn’t want to stop momentum.”

The next challenge arrived in the form of EPA officials and investigators who eventually ordered Dothan to eliminate the amount of sanitary sewer overflows escaping the city’s sewerage system. While West said sewer rate increases have financed the majority of the $125 million Dothan has since spent on sewerage upgrades, the extra cent of sales tax indirectly allowed those improvements to occur.

“Nobody could have foreseen the needs that have come up since then and all the mandates, but thank goodness that put us in the situation where we had a jump on the mandates,” Thomas said. “If we hadn’t already been working on the EPA problems before they came, we would have faced fines.”

Community reinvestment

One of the tenets of the tax law forced the city to place $6 million of the new revenue toward capital projects. As a result, facilities like the Dothan-Houston County Joint Operations Center, James Oates Park and the new Westgate Branch of the Dothan-Houston County Library System exist.

The city purchased the land for the latter two projects during Thomas’ time in office, which combined with help from outside entities and later commissions, proved to be critical steps, Thomas said.

“(The library) turned into a better thing. We acquired the land. The Wiregrass Foundation got involved and got the person in to run the fund, got a lot of community buy-in,” he said. “Having the land was key. Having the land for the southwest park was key. Who knows if it’s available later?”

Thomas said the way the situations developed almost mirrored how he thought they would.

“I wanted to do a lot of things, but more than anything I wanted to tee it up for the next guy,” he said. “I wanted the next person to be successful when the economic times kicked back. In my mind, it’s just another brick in the wall and teeing it up for the next guy.”

Some of those projects – especially James Oates Park – represent a major reinvestment into the community. The park attracts several tournaments a year, generating sales at local convenience stores, shopping complex and restaurants.

Additionally city officials have enacted a series of cost-of-living adjustments and performance-based raises for their employees with the money, Cowper and Reeder said. Since the city employs about 950 full-time employees and an additional 250 part-timers, more money in their wallets equals more money spent in the community.

Cowper said investment in employees, courtesy of the extra cent of sales tax, ensures the city provides quality services, too.

“In terms of hiring and retaining a well-qualified staff, providing the type of customer service that people are expecting and the quality of life projects and services that we provide … all of those things could be impacted if we didn’t have that revenue,” he said.

Dothan residents could witness more of that reinvestment soon. As the sales tax appears well on its way to generate $18 million this year, city commissioners have discussed several major projects in recent months.

The city could build a new track facility and combine that effort with Rip Hewes Stadium renovations, which could attract major track and field events to Dothan while bolstering local schools’ athletic programs. The city’s proposed budget includes about a $2.7 million investment into more features at Water World, and commissioners could authorize an $18-$20 million set of improvements to the oft-used Honeysuckle Road corridor.

Without that vote in 2006, though, these initiatives would not likely not be in short-term plans, Cowper said.

“We’re having conversations now about funding new football stadium, major upgrades to the water park, major transportation projects, animal shelter, the track and field facility,” he said. “There’s just a number of projects that you wouldn’t be able to consider doing if we didn’t have that.”

Follow Jeremy Wise on Twitter @DEgovbeat

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