Athens Mayor Worries About Fiscal Cliff Effects

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

ATHENS, Ala. (WHNT) - So many of our jobs in Huntsville are either with the federal government or the result of government contracts, the impact of not making a deal regarding the so-called fiscal cliff could be enormous. But what about the so-called bedroom communities, like Athens? How does a city that size plan for this kind of fiasco? 

There's a lot of uncertainty regarding this so-called fiscal cliff that we're rapidly approaching.

"But the impact of this right now is so uncertain that it all has us walking on egg shells, and that's not a comfortable feeling," says Athens Mayor Ronnie Marks. It's very uncomfortable for many when you consider just some of the dire predictions.

"And they gave us the number of 24-thousand jobs that would be lost in this state if this takes place," said Alabama Governor Robert Bentley during a visit to neighboring Decatur earlier this month. Bentley says North Alabama would be hit especially hard because so much of our economy is so closely tied to the federal government. The ripple effects would be felt throughout the Tennessee Valley.

"The impact in the Huntsville area, and Huntsville, Decatur Athens area, will impact families, will impact children, will impact sales tax, property tax, and the spiral effect of that is serious," Marks told WHNT News 19.

The first impact will be seen in your paycheck, regardless of where you work. Your social security withholding goes up January first.

"People will see that immediately, in the first check they receive in January, a two percent increase in what's withheld from their gross pay," says Annette Barnes, the City of Athens Financial Director. She says for someone earning 50-thousand a year that equates to a thousand dollars a year.

That alone is less money that people will have to spend. It impacts retail sales in stores, and therefore local tax revenues. Sales go down, unemployment goes up. And that's before any of the federal spending cuts are taken into account. Marks says all cities can do is plan for the worst and hope for the best. 

Athens officials say right now they can't even plan for the withholdings from employee paychecks. The new tax tables have not yet been released by the IRS. Also, there are unanswered questions regarding the cost of health care and the new National Health Care Act.

--Al Whitaker