WINSTON COUNTY - Sales tax may have taken a dip due to the ongoing COVID-19 pandemic, but the resulting increase in taxes related to internet purchases is benefiting school systems for the first time, and in a big way.
The pandemic has forced many shoppers to stay at home and make more online purchases instead of braving crowds in traditional brick-and-mortar stores, officials said.
The Simplified Sellers Use Tax Remittance Act, created by state lawmakers in 2015, allows only a fraction of internet sales tax proceeds to benefit schools, but those percentages will be providing free funds to help schools in many areas.
The remainder of what is henceforth being termed SSUT goes to the state’s general fund to assist state and local governments.
The Alabama Association of County Commissions took notice that May 2020 tax collections were up 84.3 percent, while sales tax among brick and mortar stores had dropped 12.36 percent, according to the Alabama Department of Revenue.
When any revenue growth, especially during a pandemic is good news, the increases in SSUT collections had concerned educators prior to the pandemic.
The Act allows eligible sellers to participate in a program to collect, report and remit a flat 8 percent SSUT for online sales in the state, according to education officials.
This means 50 percent of that 8 percent is retained by the state treasury and split, with 75 percent going to the general fund and 25 percent to the education trust fund, officials said.
According to Act #2018-539, effective Jan. 1, 2019, the net proceeds shall be distributed 60 percent to each municipality and 40 percent to each county in the state, on a basis of the population as determined in the most recent federal census.
The current law, however, does not require the county or municipality to distribute any of the proceeds to school districts, according to Candy Marbutt, chief school financial officer for Haleyville City Schools.
SSUT collections began in January 2016, but have increased since then, Marbutt stated.
For Winston County, the total in 2016 was $5,478.36 and year to date on 2020 was $343,337.26 collected in SSUT.
Effective Oct. 1, the Winston County Commission agreed to distribute 25 percent of SSUT collected and to be divided at a 60/40 split between the Haleyville City Board of Education and Winston County Board of Education, authorities said.
The division of these funds will be based on current average daily membership enrollment percentages.
Haleyville City Schools has projected based on current figures, that could mean an additional $38,000 in revenue for fiscal year 2021, Marbutt explained.
“With local county sales tax revenues decreasing around $126,000 from 2016 to 2019, this will be a much needed boost to our school system finances,” Marbutt pointed out.
Sonny Brasfield, executive director of the Association of County Commissions in Alabama, noted that increases in SSUT collections are at least in part because of changes made in January 2019, to capture more online sales, including third party retailers on Amazon.
“That really turned the page on SSUT, from it being a good idea to something that people all over the country were trying to emulate,” Brasfield stated.
Winston County Commission Chairman Roger Hayes, accompanied by Commissioner David Cummings, attended the Tuesday, Oct. 27 work session of the Haleyville BOE to express their thanks to both the HCS and WC school systems for their valued service.
Hayes noted it was not mandatory that the county commission send a portion of the SSUT tax revenue to local school systems.
“Everybody thought the county commission association was crazy for trying to do this,” said Hayes. “It’s not listed as a tax. It’s a usage fee.”
Knowing the fee was going to be eight percent, Brasfield sought this legislation.
“Now that it has passed, it is bringing in money, and it’s bringing in good money,” Hayes noted. “You’ve got to take care of education.”
The county has a two cent sales tax, but the commission does not receive this, Hayes pointed out.
Hayes told a room full of officials at the BOE work session, including those from both Haleyville and Winston County districts, that he was proud of all of them for what they do.
“I think y’all deserve some recognition, because we couldn’t have gotten this done, if our county commissioners, school boards, our superintendents hadn’t worked with us,” Hayes told those at the work session.
Hayes announced in the presence of HCS Superintendent Dr. Holly Sutherland and WC Superintendent Greg Pendley, that the funds from the SSUT will start coming to the districts in November.
“Words cannot express how important this is. Other counties are not having this much success,” Hayes pointed out. “Y’all are so important to us, and we want to continue that relationship that we have with y’all.”
This scenario is not the same in Morgan County, with their funding issue being tied up in court. Senator Arthur Orr of Decatur, at the request of school leaders, sponsored a bill to send most of the SSUT funds for that county to the county’s school system.
However, Morgan County officials refused to comply with the local law, claiming it was unconstitutional, so a lawsuit resulted.
“We think we’ll win the case,” said Hayes.
Commissioner David Cummings, who also attended the work session, noted that Haleyville City Schools and Lynn Schools from the Winston County district are in the area he serves.
“If I need something from any of y’all, I can call, and hope y’all feel the same,” Cummings said. “We are fortunate right here in Winston County.
“A lot of the counties in the state don’t get along with their school boards. You are not going to get anything done fighting with each other,“ Cummings added. “Everybody has got to work for one goal, and that is why we are here, to work together.”
In Winston County, 25 percent of the SSUT that comes to the commission will be split between the Haleyville BOE and Winston BOE, with towns and cities also receiving a portion, Hayes added.
“To make this thing work, you are going to have to share it,” Hayes pointed out. “Don’t get greedy.
“I can’t say enough about our two superintendents,” Hayes said. “I commend our education groups, our board members and our superintendents for working with us so well on this.
“We (the commission) does all the collecting. This is money that’s going to come in to them each month,” Hayes said.
About 25 percent of the SSUT is being split 60/40, 40 percent to the county on a population basis, and 60 percent municipalities on a population basis.
It was the action of the Winston County Commission to further distribute that towards both school districts in the county.
“There was none going to the schools,” Hayes reminded. “There’s money coming to the cities and counties...You have a portion of this that goes to the state general fund too.
“Out of the money we get, education is getting 25 percent of that, and the county (school) board splits a portion of that with the Haleyville (board),” Hayes explained.
Dr. Sutherland explained their portion of the funding from SSUT will go a long way in the Haleyville district.
“It’s the same as the sales tax would be in brick and mortar,” Dr. Sutherland said. “We try to use that money for capital improvements.”
The plan is to use extra funds such as SSUT not just on capital improvements but also to benefit students, by establishing more creative learning areas, enhance libraries, more collaborative areas for students to work in this technology era and outdoor classroom areas, Dr. Sutherland explained.
These things are being done to show students that these extra funds are going to help their learning needs and to create a more enjoyable learning experience, Dr. Sutherland explained.
“We feel like as online sales increase and people become more comfortable with that...overall, we’re seeing that the online sales are increasing, and that’s an area we need to benefit and maximize some of the revenue coming back in to us,” Dr. Sutherland added.
The Haleyville school district, she continued, was grateful to the county for allowing the local school districts to receive a portion of the SSUT.
“We are actually the first city school that we know of in the state that is getting any revenue from the SSUT money,” Dr. Sutherland pointed out.
Donna Jones, president of the Haleyville BOE, noted the taxes the school system will receive from SSUT will fill the gap from the decline in sales tax this past year due to the pandemic.
“We were really concerned about that,” Jones said. “Everybody could see why that decreased, because everybody was trying to stay in and stay healthy.”
The steady increase in SSUT during the pandemic has been a blessing to HCS, Jones said. “We are very thankful for it, and it will certainly be an assistance...The main thing is it will be there to help our schools.”
Pendley estimated that of the approximately $300,000 the county will receive in SSUT, 25 percent will be coming to education, divided on a 60/40 split.
“This will be substantial for us both,” Pendley said. “I just commend our county commission and both boards of education, as they have worked through this.
“It just shows the partnership we have in our county in trying to help the entirety of the county, and obviously our education system is what builds our future,” Pendley pointed out.
The Winston County district is one to one, meaning there is a ChromeBook for each student, according to Pendley, adding another shipment of ChromeBooks was on its way.
“We’re trying to do some things as far as to renovate our facilities and get things in a safer, better environment for our kids. Not that is not safe and good now, it just going to be better than what it is presently,” Pendley continued.
Jones added on behalf of HCS, “On a daily basis you can walk across campus, and even through everything looks great and is being upgraded, you can still walk around daily and see other things that need to be done.
“It’s something that is just constant, because you are trying to meet the demands of the safety precautions and the guidelines that have been set up by the state that have to be followed, as well as meeting the needs of all of our students, and that’s the main thing,” Jones concluded.
Pendley then added, “At the end of the day, we’re all trying to achieve the same types of things and that is to make our county better.”
See complete story in the Northwest Alabamian.