Why we should worry about what’s happening to Hoover

Galleria in HooverYou’ve probably had the misfortune of noticing a few ants crawling around in your kitchen cabinet.

This is almost always a tell-tale sign that there are a lot more ants nearby.

That’s what we’re beginning to see with Hoover.

Hoover is beginning to struggle financially

A recent study by Porter, White & Co. …“determined that the city of Hoover could have a general fund budget deficit of $2.8 million by the end of fiscal year 2018. That deficit could continue to grow to up to $7.2 million in 2022 if action isn’t taken by the city.”

According to al.com, “Hoover Mayor Frank Brocato called on city officials, business leaders and citizens to come together to solve the ‘serious financial challenge’ ahead.”

“City staff is already “digging deep” in cutting costs, Brocato said, but he doesn’t want it to be at the detriment of city infrastructure and services.”

Hoover is not alone (more ants)

Fairfield lost Walmart—its largest revenue generator and has been holding on by its fingernails.

Irondale lost Sam’s Club—its largest revenue generator—and just voted down a property tax increase.

Gardendale, after failing attempts to create an independent school system, is investing in risky land acquisition and infrastructure in the hope of attracting retail.

Homewood, one of our more prosperous suburbs, raised sales tax by 1%.

Vestavia Hills just voted to increase its sales, lodging, and leasing taxes.

Both Homewood and Vestavia Hills want to add amenities that should come from growing tax revenues—not tax increases.

Hoover’s financial struggles are a symptom of a much broader problem

Our region is not growing:  According to the Birmingham Business Journal, of 53 metros with populations of at least 1 million residents, Birmingham—Hoover (seven county metro) ranked 42nd in growth.

Jefferson County has had virtually no population increase in 50 years and actually lost population last year.

Alabama cities depend on sales tax: Unlike other states, sales tax is the largest single source of municipal tax revenue for Alabama municipalities.

With Amazon and online sales growing, brick-and-mortar stores and sales taxes are plunging.

More than 8,000 U.S. stores closed last year.

Frank Brocato, the Mayor of Hoover, complained...”the effect of online sales is causing his city, which annually takes in $4 billion in retail sales, to take a pretty sizable revenue hit…if the Galleria takes in $1 million in sales today, that equates to $30,000 in revenue. However, if residents spend that $1 million on the internet, the city would only receive $550.”

Cities in other states compete as a region: We should not be surprised that metro Birmingham has had virtually no job growth this century. We’re battling cities like Nashville and Charlotte that collaborate as a region while we only utilize the resources of the City of Birmingham, which represents less than 1/3’d of the population of Jefferson County.

Our suburbs don’t invest their economic development dollars in regional development—they spend only on themselves–usually against their neighbors.

Make the pie larger

We must create a mechanism for our mayors to meaningfully work together.

We’ve spent in excess of $150 million dollars stealing businesses away from one another in the past 15 years. These lost tax dollars could have been used to recruit new businesses and jobs from out of state.

Now’s the time to contact your mayor or city councilor to suggest they quit pilfering businesses and develop a comprehensive-inclusive economic plan.

Raising taxes and stealing businesses are not good long-term strategies.

We are not going to tax ourselves into prosperity.

Let’s turn Birmingham around.  Click here to sign up for our newsletter. There’s power in numbers. (Opt out at any time)

David Sher is Co-Founder of AmSher Compassionate Collections.  He’s past Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham), and the City Action Partnership (CAP).

Invite David to speak to your group about a better Birmingham. dsher@amsher.com

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4 thoughts on “Why we should worry about what’s happening to Hoover”

  1. If these suburban cities went bankrupt and were forced to disincorporate or merge with Birmingham or each other, that would be a good thing.

  2. This is one of your best pieces David. The problem with the truth is that it is inconvenient and uncomfortable. Therefore, it gives people a reason to sweep it under the rug, shrug it off, and ignore it in hopes that it will go away. There is so much hype around the possibilities but possibilities don’t pay bills. Alabama is an agricultural state, and we could do really well if we focused on it. Together.

  3. Great piece and an accurate depiction of challenges facing our municipalities. The way Alabama funds local governments is outmoded and punishes the very businesses we depend on. The ever increasing reliance on sales taxes reduces the ability of our retailers to compete in a global economy and spreads the tax burden disproportionately to the weakest among us. While our incredibly low property taxes benefit our mining, agriculture, and timber interests etc., we must find creative solutions to keep our retailers afloat.

  4. David,
    What can I do to help promote a simple agreement between all local municipalities to cease business pilfering from one another?

    Isn’t it the right thing to do (not to mention it possibly being a more coordinated thing to do) to allow a Target, Walgreens, or any other business entity to build where they need to be -without artificial manipulation using tax abatement and other incentives to lure that businesses from one area to another?
    Couldn’t the money used to attract business from one area to another have been money used to improve schools, roads, and infrastructure instead? Why would we fight internally this way? I heard a number not long ago that area communities had spent $200 m on these kinds of payments in the past 10 years. Now that is a lot of money! If that is anyway near being accurate we have a lot to learn about the power of internal cooperation and concern for the long-term welfare for all of our area.

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