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Montgomery occupational tax becomes state issue

By WILL WHATLEY and TODD STACY, Alabama Daily News

MONTGOMERY, Ala. – A proposed occupational tax in Montgomery is facing opposition from state employee organizations and on Thursday a House committee will hear legislation banning new occupational taxes statewide.

In a letter to Montgomery Mayor Steven Reed, Alabama State Personnel Director Jackie Graham and Alabama State Employees Association Executive Director Mac McArthur expressed their opposition to a proposed occupational tax aimed at salaried employees working within the city limits but living elsewhere.

“While we understand your desire to increase revenue in order to pay city employees higher salaries and hire additional first responders, we are not in favor of you doing so at the expense of State employees,” the letter states. 

Ltr Steven Reed 1.28.2020

The Montgomery City Council is considering a proposal that would charge those living outside Montgomery but working in the city limits a 1% tax on their salaries to pay for city services, including increased police protection.

According to the letter, approximately 10,000 State Merit System employees working in the city, as well as thousands of workers employed with the state legislature, Administrative Office of Courts, and numerous educations organizations, the State is the largest within the city limits. They state the proposed one percent occupational tax will disproportionally employees assigned to work in Montgomery.

“State employees are fortunate to have received much-needed Cost of Living Adjustments (COLAs) the past two years,” the letter says, which also raises the fact that state employees went 10 years without COLA, five years without annual merit raises, and rising costs for health insurance and retirement.

Meanwhile, the House County and Municipal Government Committee on Thursday is scheduled to consider a bill that would ban local governments from enacting any new occupational taxes. House Bill 147 is sponsored by Rep. Chris Sells, R-Greenville.

Sells says many of his Butler County constituents would be the ones financially impacted if Montgomery levies an occupational tax.

“For someone making $50,000 a year, that’s an extra $500 out of their pocket just because they live in Greenville. That could be their kid’s Christmas,” Sells said.

The bill wouldn’t impact cities that already have an occupational tax, such as Birmingham, Auburn and Opelika.


Graham and McArthur also said that while their main concern is the decrease in take-home pay for employees, there could also be unintended consequences. State agencies struggle attracting qualified candidates to move to Montgomery because they have a negative perception of the city.

“Your proposal will magnify the disadvantages State agencies already face and effectively stifle our recruiting efforts,” the letter says.

The final issue raised by Graham and McArthur that while most State agencies are currently headquartered in Montgomery, the proposed occupational tax could lead to some agencies moving to neighboring cities which would place a logistical burden on citizens in need of State services.

The letter closes with this statement: “[w]e respectfully request that you reconsider your proposal that would place an undue burden on our hardworking State employees and urge you to consider other funding options for additional revenue.”

Sells was unsure if he would be able to advocate for his bill before the committee Thursday after he sustained a foot injury this week. But, with the Montgomery occupational tax issue still very much on the table, he said he’s going to continue to press his case as the session moves forward.

“Representing a place like Butler County, we shop in Montgomery. We go to dinner and a movie in Montgomery. We pay as much Montgomery tax as we can afford to pay.”

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