Aldermen propose tax hike of 2.78 mill

August 14, 2013 10:41:51 AM

Carl Smith - [email protected]


An almost-3 mill tax increase is likely if Starkville is to tend to increasing expenditures, including a long-overdue pay raise for its employees, departmental requests, outside contributions and its plan to construct a new City Hall and renovate Starkville Police Department's home. 


Aldermen showed their intent Tuesday to raise taxes by approving a 2.78 mill notice Tuesday during a budget meeting. State law requires at least two public hearings on the matter and another vote before ad valorem rates are adjusted to meet increasing expenditures. 


Starkville's current millage sits at about 20 mills, and the proposed increase would bring in about $528,200 to the city coffers. A single mill gives city government about $190,000, but officials say a 2014 property reassessment should add some value to the rate.  


The mill rate is based on mills; as each mill is one-thousandth of a currency unit, one mill is equivalent to one-tenth of a cent or $0.001. Property tax in dollar terms is calculated by multiplying the assessed property value and the mill rate and dividing by 1,000. As a property may be subject to tax by a number of different authorities, mill rates are set by each taxing authority so as to meet the revenue projections in their budgets. 


Ward 5 Alderman and Starkville Audit and Budget Committee Chairman Scott Maynard said the increase will allow the city to be competitive and facilitate future budgetary planning. The board, he said  


Tuesday, would not seek a tax increase in the following fiscal year. 


Maynard recommended the increase after working off of departmental and outer-organizational requests while balancing the need to fully fund Starkville's long-term capital improvement projects and its first significant employee pay increase in three years. 


While the tax rate remained relatively flat under the previous board - former aldermen did not significantly increase the millage - expenses from this fiscal year are expected to increase into the next. 


"We've kicked the can down the road," Maynard said. "I don't want to raise taxes, but I'm looking at what our needs are, not only for this year but for the future. 


"The alternative to a tax increase? Wiping out everything (the board) said is important," he added later in Tuesday's meeting. 


The board lamented the potential tax increase, and many aldermen described the situation as forced by previous boards' actions. Only Ward 6 Alderman Roy A. Perkins and Ward 7 Alderman Henry Vaughn opposed the intent notice.  


A summary of departmental funding changes presented before the meeting showed an increase of $572,457.16 from last year's budget. That figure is expected to be offset by an increase to the sanitation rate -- that department alone submitted an increase of $235,290 spread across multiple line items -- and further adjustments. 


Perkins, who has stated numerous times he would oppose any tax increase, took aim at Starkville's city hall construction plan, saying the project's debt service is strangling the budget.  


He directed Board Attorney Chris Latimer to prepare a report for Tuesday's regular board meeting on the legality of removing the project from the books and pledged to do so if legally cleared. Starkville  


Mayor Parker Wiseman said any attempt to not fund its payments would put the city in default, creating a doomsday scenario for its credit rating. 


The city is budgeting $370,000 for its debt service in the coming year, monies Maynard said were in the budget, but the figure is expected to increase to about $538,000 per year. Under the 20-year lease/purchase department renovations did not raise taxes and would be funded by monies free in Starkville's budget, soon-to-be retired debt and organic revenue growth. 


Interest on the project, which is funded by certificates of participation, is higher than rates associated with general obligation bonds, Wiseman said, since GO bonds bind a city to raise taxes as needed for payments. 


The municipal building fund is included in the city's capital projects line item, a $1.08 million budget which includes sidewalk accessibility projects ($132,000), street improvements ($350,000), storm drainage work ($100,000) and the Carver Drive ditch project ($53,000). 


To address pay disparity identified in a 2012 report developed by Mississippi State University's John C. Stennis Institute of Government and an informal polling conducted by Starkville Personnel Director Randy Boyd, Maynard proposed a 4 percent pay raise for city employees, including entry level firefighters and police officers, whose pay is significantly lower than peers in other municipalities. Many employees would see a 2.5 percent pay increase under his original proposal, while department heads would also benefit from a 1.5 percent raise. 


After Maynard said the pay raise alone would set the table for a tax increase, Perkins motioned to implement a 1 percent raise -- about $78,000 combined for employees -- which would utilize the city's ending fund balance to avoid a tax increase. Perkins' unsupported motion died at the table.

Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch