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Clay schedules public hearing for possible levying of property tax

By Lee Weyhrich

CLAY — The city of Clay has scheduled a public hearing to discuss the possibility of a five-millage property tax.

The meeting will be Monday, June 16 immediately following the Clay City Council meeting, which begins at 6:30 p.m. at Clay City Hall at 2441 Old Springville Road.

At the May 19 city council meeting, City Manager Ronnie Dixon discussed a shortcoming of roughly $20,000 per month below the city’s budgeted income. At the June 2 meeting he reiterated this problem.

“A little more than two-thirds is dependent of sales tax income, about one half of the remaining third comes from business licenses and half of the remaining third comes from franchise fees, so nothing that we have in the way of income is stable,” Dixon said. “All of it is dependent upon sales of some sort.”

Clay City Hall
file photo by Gary Lloyd

The city council had a five-millage property tax increase on its agenda in August 2013, but voted 3-2 to remove it from the agenda. It would have generated an additional $500,000 in revenue for the city. Dixon said last year that the average home value in Clay is $120,000 and there are 2,900 houses in the city.

Clay last August also voted to increase its sales tax by two cents.

Property tax is the only way the city could bring in revenue that isn’t completely dependent on local sales. Clay currently has zero property tax, though Clay residents are currently paying Jefferson County property taxes which, in turn, go to the schools, Mayor Charles Webster said. A five-millage property tax would be an additional .005 cents tax for every dollar of property value.

The public hearing will be a chance for the council and Clay residents to discuss what could be done with the new source of revenue. Once the tax has been discussed, city officials can then vote on whether or not they want to pursue a resolution putting a property tax into effect.

Without a steady income there are several things the city is unable to offer, including retirement benefits for its employees. Several months ago Dixon was tasked with looking into Retirement Systems of Alabama as a retirement plan for city employees.

“It would be my recommendation that we not participate in Retirement Systems of Alabama,” Dixon said. “That is a defined benefit program where if you are vested in 10 years of service you are guaranteed a certain percentage of your salary, and without us having a guaranteed base income I don’t see how we can put that on the city.”

Dixon did talk about being allowed to pursue a 401k type plan so that employees may contribute.

Retirement Systems is using an 8 percent growth to their retirement accounts as a benchmark, but over the last three years it has only generated a 3.2 percent growth, which would leave the city liable for the remainder, Dixon said.

Retirement Systems of Alabama Director of Communications Michael Pegues, however, said the actual earnings were 14 percent last year and 11 percent over the last three years, not 3.2 percent.

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