Since January 12, 2009, when the Judge David Rains held that the repeal Jefferson County occupational tax was valid and the taxpayers of Jefferson County were owed a refund, the Jefferson County legislative delegation has attempted to craft statutory fixes for the tax.  Each bill has been constitutionally and procedurally flawed.  Beyond those flaws – each bill tries to take away the refunds granted to the taxpayers of Jefferson County.  And – as if to add insult to injury – two of the bills attempt to increase the occupational tax.  Although they do not come right out and say it – from all appearances the Jefferson County legislative delegation is trying to fix the sewer debt problems by increasing the occupational taxes paid by workers in Jefferson County. 

While a legislative solution is clearly needed, any bill that gets passed granting the Jefferson County Commission the authority to levy an occupational tax needs to be one that is not only fair to the tax payers of Jefferson County, but also constitutionally and procedurally sound. 

Here is a summary of the three bills currently pending before the Alabama Legislature regarding the ability of the Jefferson County Commission to levy an occupational tax:

Senate Bill 488 was introduced by Senators Coleman, Waggoner, Smitherman and French.   This bill attempts to “repeal the repeal” of the occupational tax, which effectively takes away the relief awarded to the taxpayers of Jefferson County by the Court.  It attempts to allow the Jefferson County Commission to proceed as if that lawsuit never existed.  Additionally, this bill allows the tax to be levied at the same rate as the occupational tax collected by the city of Birmingham, which is one percent.  The tax that Judge Rains correctly held was repealed was levied at the rate of one-half of one percent.  Effectively, this bill would give the Jefferson County Commission the authority to raise the occupational tax by one-half of one percent – doubling the tax they have been illegally collecting since April of 2000.

Senate Bill 542 was introduced by Senators Waggoner and French.  This bill also attempts to “repeal the repeal” of the Jefferson County occupational tax.  Under this plan, the occupational tax that the Jefferson County Commission has been collecting since April of 2000, with all of its exceptions and carve-outs, would be affirmed and there would be no relief for the taxpayers who won the lawsuit which found the repeal to be valid.  The tax rate of one-half of one percent would continue to be collected by the Jefferson County Commission as if the lawsuit won by the taxpayers never happened.

House Bill 811 was offered by Representatives Rogers, Robinson, Dunn, Moore and Scott.  This bill takes elements of both Senate Bills, and combines them into a bill attempting to “repeal the repeal,” effectively taking away the refunds awarded the taxpayers of Jefferson County, while allowing the Jefferson County Commission to increase the rate at which the occupational tax is levied.  This bill also earmarks funds to be paid from the increased tax to the BJCC and the Transit Authority.

Each of these bills suffers from major constitutional flaws.  First, under Article IV, Section 70 of the Alabama Constitution, “All bills for raising revenue shall originate in the house of representatives.”  Any bill relating to raising revenues that is introduced through the senate violates this provision of the Alabama Constitution.  As each of the Senate Bills was introduced through the wrong chamber of the Alabama Legislature, neither can stand constitutionally.    

Further, Article IV, Section 95 of the Alabama Constitution provides, “[T]he legislature shall have no power to revive any right or remedy which may have become barred by lapse of time, or by any statute of this state.  After suit has been commenced on any cause of action, the legislature shall have no power to take away such cause of action, or destroy any existing defense to such suit.”  The taxpayers of Jefferson County won the lawsuit and were awarded refunds.  The repeal of the occupational tax is valid.  The legislature cannot now “repeal the repeal” and make valid the Jefferson County Commission’s right to levy the old occupational tax.  That right was barred by statute and that statute was upheld by Judge Rains.  Further, the legislature cannot take away the lawsuit from the taxpayers of Jefferson County.  These bills provide nothing more than an attempted end-around by the Jefferson County legislative delegation past the Courts of this State.  Each of these bills violates this constitutional provision. 

Particularly disturbing is the Alabama Legislature’s attempt to not only take away the refunds awarded to the taxpayers, but through Senate Bill 488 and House Bill 811 actually increasing the occupational taxes the Jefferson County Commission can levy.  Under the current economic situation facing the taxpayers of Jefferson County, to potentially double the existing invalid occupational tax is obscene.  

If the Alabama Legislature wants to create a fix for the Jefferson County occupational tax, then a new tax bill – one that is fair to the taxpayers working in Jefferson County – should be offered in the house of representatives.  While the Jefferson County legislative delegation may have acted imprudently in repealing the original occupational tax in 1999, their actions were legal and valid.  The Alabama Legislature must recognize the validity of the repeal and any authority given to the Jefferson County Commission to levy an occupational tax must be under a new, fair and legally valid bill. 

There is no question that Jefferson County is in a treacherous financial position.  Whether or not a new occupational tax is a solution to the problems created by out-of-control spending and lack of fiscal responsibility is yet to be seen.  However, should the Alabama Legislature choose to put the ability to levy a new occupational tax in the hands of the Jefferson County Commission, then such authority should be given careful consideration so that any new tax that is levied is fair and legally sound.  As taxpayers and voters in Jefferson County, we should accept nothing less.