STARKVILLE — Aldermen voted 4-3 Tuesday to call a public hearing for a 1.87-mill increase in ad valorem taxes for Fiscal Year 2024.

If approved, the increase would generate close to $600,000, balancing the city’s proposed budget for next fiscal year while also funding roughly $540,000 in pay increases prescribed by a Stennis Center on Government study.

The hearing will be held during the next board meeting, which begins at 5:30 p.m. Aug. 15. Mayor Lynn Spruill said the board would consider approval for the tax increase on Sept. 6. The new fiscal year begins Oct. 1.

Ward 2 Alderwoman Sandra Sistrunk, who serves as the board’s budget chair, planned to propose a 2.5-mill increase based on numbers from the salary study suggesting $850,000 in pay raises for select positions. About $310,000 of that total, however, would be for salaries paid from enterprise funds “related to utilities,” rather than the general fund, Human Resources Director Navarrete Ashford told The Dispatch.

“I think we’ll get through next year at a breakeven point,” Sistrunk told The Dispatch in an interview before Tuesday’s meeting. “Would I be more comfortable if we had more margin for error? I would.”

The new millage would raise the city’s rate to 32 mills and account for the first tax increase since 2021. A mill is a measure of ad valorem tax collected on personal and real property. On their annual tax bill, the increase would cost homeowners an additional $18.70 per $100,000 of property value and business owners an extra $28.05 per $100,000 of property value.

The proposed compromise comes after weeks of heavy cost cutting, with aldermen in July entering planning sessions for next year’s budget staring down a potential $2.8 million deficit. A preliminary round of cuts, which included freezing hiring for three vacant police officer and nine firefighter positions for the second straight year, reduced it to about $1 million. Other minor cuts, along with a better understanding of what raises would be coming from the general fund, brought the difference to roughly $600,000.

“To me, we are in need of a tax increase,” Spruill said during Tuesday’s board meeting. “It is reflective of the salary study that allows us to hopefully meet the market for our employees and give them the raises that are appropriate for us to retain and to hire people. … It also reflects the flat nature of our sales tax.”

The city budgeted a $600,000 increase in general sales tax revenue for FY 2023 but is only on pace to realize a $100,000 bump from the previous year.

“We probably should do more, but I understand the pain associated with an additional millage,” Spruill added. “So I think this is the minimum we can do and meet our obligations.”

Not everyone agreed.

Ward 5 Alderman Hamp Beatty suggested a second straight year of using reserve funds to balance the budget, after the board budgeted using $300,000 this year.

Mike Brooks, of Ward 4, said he had looked at the Stennis salary study and specifically noted there were 21 suggested raises — for positions “between the mid 40s to over 140 (thousand)” — that averaged 14%. He suggested reducing all raises suggested in the study to 6%.

Jeffrey Rupp, of Ward 3, said he didn’t believe that would generate enough savings to avoid a tax increase. He also opposed another year of dipping into reserves.

“I’m not happy about that, but … I would support it,” he said. “To Alderman Beatty’s point, we did sort of raid the savings account last year. I was in favor of that, but I’m not crazy about doing that every year.”

Sistrunk noted the salary study was meant to get salaries for city positions in line with the market. Flat-rate raises for all positions, Sistrunk added, would result in Starkville not being competitive with the private sector or other municipalities.

“I don’t want any (employee) to leave here because we’re not paying them enough,” she said.

Ward 1 Alderman Ben Carver, who said he is “undecided” on whether he would vote for the tax increase but later voted against having the hearing for it, suggested financial literacy courses as an alternate way to retain employees — specifically explaining to the “lower wage” workers the value of being in the Public Employees Retirement System.

“It’s a small thing, but it’s … understanding how much of an honor and privilege it is to work in state government, and especially the city of Starkville,” he said.

Sistrunk, Rupp, Vice Mayor Roy A. Perkins and Ward 7 Alderman Henry Vaughn approved the public hearing for the tax increase, while Carver, Brooks and Beatty opposed.

“This is a necessity,” Vaughn said. “… We’ve got to have enough finances to fund this city.”

Zack Plair is the managing editor for The Dispatch.

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