On April 15, 2009, the Jefferson County delegation to the Alabama House of Representatives held a public hearing on House Bill 811. The delegation heard from Jefferson County employees, commissioners, and lawyers Sam Hill and Jim McFerrin, the attorneys representing the class of tax payers who successfully challenged the prior occupational tax.

The result of the hearing was an amended bill that passed out of the House committee to re-enact the occupational tax at a lower tax rate, but expanding the base of tax payers to include those professionals who have previously been carved out of the occupational tax. The bill, as amended, also cures the constitutional problems of the original HB811 by not attempting to retroactively validate the prior tax. If passed by the Senate, this bill would become effective upon Governor Riley’s signature and, in our view, the tax payers of Jefferson County would be entitled to refunds for the period of time between Judge Rains January 12, 2009, Order and the effective date of the new Act.

This Bill is a tax cut for the majority of workers in Jefferson County. The prior occupational tax was collected at the rate of 0.50%. The new tax rate would be 0.45%. However, more classes of workers would pay the tax – which leads to a net income increase for the County. The amended Bill earmarks money for the Birmingham -Jefferson Civic Center Authority, the Birmingham Jefferson County Transit Authority, the Cultural Alliance of Birmingham, the Alabama Sports Festival, and UAB. All told, the amended HB811 earmarks $20,250,000.00 of tax revenues to these entities. All remaining collections would go into the Jefferson County general fund.

This Bill will now go before the Alabama Senate. We will update this blog with any information that becomes available as the Bill works its way through the legislature. Though not perfect, HB811 as amended appears to provide the best alternative so far offered by the Alabama Legislature to fix the Jefferson County occupational tax.