Covington is in the best financial shape of any local government — thanks in large part to revenue from electric and gas sales — but it still has a tight budget. And while employees want to undertake new projects to improve operations, the council seems more inclined to give some money back to citizens through a small property tax cut.
Though a final vote on the budget won’t come for weeks, Covington officials held their first budget meeting for fiscal year 2014 Tuesday, and the City Council reached an informal consensus to give city employees a 2.5 percent raise while cutting the city’s 8.208 millage rate by half a mill.
Reducing the property tax rate would cost the city about $244,000 in property and other ad valorem tax revenue, City Manager Leigh Anne Knight told the council.
The council agreed to go through the budget process to see if the money was critically needed elsewhere before deciding to commit to a tax cut. For a home valued at $150,000, the reduction of half a mill would represent a savings of $30 on a Covington property tax bill ($492.48 reduced to $462.48).
Councilman Chris Smith raised the idea because he wants to give back to the public, and residents have the perception that the city is “rolling in money.”
Cutting the millage rate by half a mill has essentially the same monetary effect as giving all city employees a 2.5 percent raise. The budget presented by Knight called for employees to get a 5 percent raise, but Smith suggested halving that raise and cutting taxes instead.
However, even if the city chooses not give employees a 5 percent raise, Knight and Deputy Director Bill Bouchillon said there are several other areas where that money could be used, to improve city services.
The city only projects to receive $4.01 million in property taxes next fiscal year, which runs from July 1, 2013 to June 30, 2015, as the majority of its $133.1 million in revenues comes from sales of electricity, gas and water.
Mayor Ronnie Johnston said he liked the idea of both giving employee a raise and giving citizens tax relief, even if the tax break is more symbolic than practically beneficial for residents. He said he understands that city departments have been running tight for years, but he believes citizens would appreciate a cut more than they might notice slightly improved service.
Council members Ocie Franklin, Janet Goodman, Mike Whatley and Hawnethia Williams all expressed at least tentative support for the idea of a tax cut. Councilman Keith Dalton did not attend the work session.
Knight said several items and projects were cut out of department heads’ original budget requests, including new accounting software, a truck for the public works department, a tractor to mow grass and sidewalk projects. All of those would benefits citizens either directly or indirectly, Knight and Bouchillon said.
In addition, the point was made that not every resident is helped by a millage rate decrease, as renters are not likely to see any benefit. Landlords could theoretically lower their rents, but officials seemed to think that was unlikely.
Finally, Knight said most residents have already seen a tax bill decrease in each of the past few years because their property values have declined — the same reason the city has received less revenue from property taxes.
At this point, Knight said the city projects to collect $568,000 more in revenue than it plans to spend. She said it’s not really a surplus, but more of a contingency in case major expenses come up during the year.
Knight said she would like to see that contingency not drop below $400,000 in any given year and stay closer to $500,000.
Another consideration is improving employee retention. One reason city administrators had budgeted for a 5 percent increase is that the city’s wage rates are below market rate, which is making it difficult to retain certain employees, said Ronnie Cowan, personnel director and director of administrative services.
One example is electrical line workers, who can make quite a bit more at private companies or with other governments. The city pays to hire and train the employees, who then go elsewhere, taking that training investment with them. Firefighters with emergency medical training are another job classification that could be underpaid, council was told.
Fire Chief John McNeil presented his budget to the council Tuesday and was requesting some more money to pay for a new employee.
McNeil said the fire department needed a dedicated trainer to help the newly EMT-certified firefighters maintain their certification. Councilman Smith, a former EMT, passionately advocated for the new trainer, saying he didn’t want to see any firefighters lose their status and start from square one.
He said EMTs have to continuously train so they can be re-certified every two years and noted that the hospital’s recent reduction of ambulance service puts more of an emphasis on firefighters as emergency medical first responders.
The position, officially titled Fire EMC Training Coordinator, will pay $75,632 in salary and benefits. McNeil said he has an internal candidate in mind for the position; if that person is promoted another firefighter will have to be hired.
McNeil also requested more firefighters to get closer to having four firefighters on shift per truck at all times, which is a best industry practice. But the council agreed there was no money for that in this year’s budget.
Part of the cost of a new employee would be offset by lower overtime costs. McNeil said he probably wouldn’t need the budgeted $275,000 of overtime pay and could do with $225,000.
The city’s next budget meeting is Tuesday at 5:30 p.m. in the city conference room.