STARKVILLE — A proposed tax increase in the city’s Fiscal Year 2023 budget appears to be headed for failure.
However, the pay raises the tax increase is meant to help fund are already on the books.
Aldermen on Tuesday approved across-the-board pay raises for all 311 of its full-time employees, as well as four part-time positions, the mayor and board members.
The city is using roughly $108,000 from the recent sale of former industrial park property on Airport Road to fund those raises through Sept. 30, when Fiscal Year 2022 ends. How exactly the city will fund the continuation of those raises, which are budgeted to cost $1.1 million next fiscal year, remains a matter of debate.
Aldermen have held two public hearings on a balanced budget that would fund roughly $800,000 of the raises through projected revenue growth and the remaining $305,000 through a 1-mill increase in ad valorem taxes, which would raise a property owner’s tax bill by $10 to $15 for every $100,000 of assessed property value owned.
A growing faction of the board, though, wants to use part of the city’s fund balance, which is expected to reach $2.75 million by Sept. 30, to fund the pay bumps instead of raising taxes. Mayor Lynn Spruill, who has said she supports the millage increase, told The Dispatch on Wednesday she believes the majority of the board opposes it.
“Right now, I don’t believe we have the votes for the 1-mill increase,” Spruill said. “I anticipate (raise funding) will come from his year’s ending cash balance.”
A vote on the budget and the tax increase is expected at the board’s Sept. 6 meeting.
The raises
The pay increases aldermen approved Tuesday are guaranteed for next year and beyond regardless of how they are funded. They range from 1.5 to 23 percent and raise the lowest hourly wage the city pays any full-time employee to $14, Human Resources Director Navarette Ashford told The Dispatch.
Police raises range from 10 to 23 percent, Ashford said, while fire department wages increased between 5 and 11 percent. The pay is meant to promote officer recruitment and retention, as those departments are a combined 33 employees short.
Nearly all elected officials saw increases, as well. Spruill’s pay jumped nearly $19,000 to a salary of $93,8323 annually (up from $75,000).
Pay for six of the seven aldermen increased by $1,328 annually to $21,328. Ward 5 Alderman Hamp Beatty, who is retired through the Public Employees Retirement System, did not accept the raise because it would exceed the amount PERS would allow him to make and still draw retirement, Ashford said.
The city used data pulled from a study which compared its pay to places like Horn Lake, Olive Branch, Tupelo, Oxford, Brandon and Columbus, Ashford said. Departments where employees saw the least amount in raises were the ones already least out of line with peer cities.
“You’ve got departments like Airport, for example, that saw the 1.5 percent,” he said.
The budget
Ward 2 Alderwoman Sandra Sistrunk, who serves as the board’s budget chair, strongly advocates for the tax increase and called efforts to use the city’s ending cash balance to fund raises “short-sighted,” comparing it to “spending money from your savings account.”
The city’s overall proposed general fund budget for Fiscal Year 2023 is a little more than $27 million. She said preserving the $2.75 million cash balance expected for the end of this year could help the city’s perceived credit worthiness — bonding agencies like to see municipalities holding a cash balance of at least 10 percent of their total budget, she said.
The tax increase would bring the city’s millage rate to 31.13, still fifth lowest among similar sized cities in Mississippi.
Further, Sistrunk said, the proposed 2023 budget is “aggressive” in projecting new revenue.
Sales and ad valorem projections combine for almost $18.4 million in expected revenue, compared to roughly $16.9 million the city intends to collect from those sources this fiscal year. That includes a $500,000 jump in sales tax collections and more than $800,000 in additional ad valorem, both of which Sistrunk admitted are “a lot.”
That takes into account the city’s newly annexed territory to the east of the old city limits, which added 2.3 miles and about 1,600 people, and adds 3 to 4 percent growth, which Sistrunk said had been the standard for Starkville in most recent years.
There are also $500,000 in “frozen” positions — seven in the fire department and two in police — that will eventually need to be filled.
“I hope those folks who are wanting to use the fund balance realize they are choosing a short-term solution that is not sustainable,” Sistrunk said. “We’ll be talking about it this time next year.”
Beatty, Ward 3 Alderman Jeffrey Rupp and Ward 4 Alderman Mike Brooks, however, help form a bloc on the board wanting to delay the tax increases at least another year.
The projected fund balance is about $338,000 more than what the city had on hand at the end of last September. So they all said using that money is — and thereby carrying over essentially the same fund balance as last year, rather than growing it — is more prudent than raising taxes.
“Raising taxes is always a last resort,” Rupp said. “There’s enough fluidity in the budget that I don’t think we need to do it this year.”
All three point to the annexed territory, the near completion of the city’s baseball/softball complex and Cornerstone Park and developments like Triangle Shopping Center under construction — which will include stores like Aldi, TJ Maxx, Five Below and Rack Room Shoes — as ways growth could keep funding the raises long-term.
“Next year, we could grow our way into where we can meet our budgetary requirements without a tax increase,” Beatty said.
Brooks pointed to vacant positions as an obvious sign a tax increase can wait.
“(Beyond the frozen positions not in the budget) we have several positions that are budgeted, and the raises are budgeted for them too, that we haven’t filled,” Brooks said. “The reality is it’s a tough environment out there. We can try as hard as we can this year to fill all those positions, and we’ll still probably come up short.”
Ward 7 Alderman Henry Vaughn, who sides with Sistrunk, told The Dispatch he would rather the city not bank on “unknowns.”
“If we don’t do this now, we’ll have to do it next year,” he said of the tax increase. “We don’t know what we’ll have then. We know what we’ve got right now.”
Ward 1 Alderman Ben Carver did not return a call or message seeking comment. Vice Mayor Roy A. Perkins, who represents Ward 6, could not be reached by press time.
Zack Plair is the managing editor for The Dispatch.
You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 46 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 46 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.
Join the Discussion