City officials ask citizens to vote ‘yes’ on April tax hike

Published 4:24 am Wednesday, April 18, 2018

The city is asking citizens to vote for a 12-mill property tax increase this April, in order to help fix a budget problem with the city’s retirement system for employees, according to Bogalusa Mayor Wendy Perrette.

The increase will be up for vote on Saturday, April 28, but early voting is already taking place.

“This has been an ongoing issue that has not been addressed,” Perrette said. “This problem started years ago, prior to this administration. I felt this should be addressed rather than ignored. The retirement system would be bankrupt in 2021.

This is to keep the system 100-percent funded rather than just keeping it afloat. I also felt like it should be dedicated to where monies were used — this would ensure street repair or light bills weren’t being paid with this money and the retirees and potential retirees would have a retirement.”

‘”We owe it to these people, because it was promised to them when they started,” said Director of Administration Stacy Smith, who is a CPA.” It is for a property tax that will go straight to the City of Bogalusa Employees’ Retirement System (COBERS). COBERS is primarily for the office workers and public works employees. The fire and police departments have their own separate retirement systems.

“COBERS has been underfunded for years. Now it is at the point that it is underfunded by $13.7 million, according to the actuary report as of June 30, 2016. There are more retirees withdrawing from the system than there are employees contributing to the system.”

Smith said that if the city does not increase contributions to the system, it would be bankrupt within five years.

“The city currently does not have the funds required to keep the system afloat,” Smith said. “This is why the city is asking for the property tax.  According to the retirement system’s actuary, the 15-mill property tax up for election should be enough to cover the unfunded liability and make the retirement system financially sound.

“The city is asking for 15 mills in this election. However, it is really only an increase of 12 mills, because three mills expired after 2017. Overall, the 15 mills will result in a 25-percent increase in taxes. For example, if a homeowner’s property tax was $200, the tax with the new rate would be $250 — an increase of $50 for the year.”

Smith said that the city can not simply hire additional employees to contribute to the retirement plan, in order to fix the funding issue.

“The city currently contributes 11 percent of salaries to the system, and employees contribute 6 percent,” she said. “Employing more people would cost more in salaries and benefits to the city than the contributions gained.”

Smith also provided a detailed example. She said that if the city hires three employees at $20,000 per year each, the retirement system would gain $6,600 in city contributions and $3,600 in employee contributions, for a total increase in contributions of $10,200. However, it would cost the city $60,000 in salaries, $6,600 in retirement, plus approximately $23,000 in health insurance, for a total cost of $68,900 to the city. The city simply cannot afford the cost for the amount of benefit received in the retirement system, Smith said.

Each member of the Bogalusa City Council said they planned to vote for the additional millage.

“I would just like to say how important this millage is for the public works department,” said Brian McCree, who represents District C. “Everyone deserves for their retirement to be there upon retirement, and I know that we as a city will support our public works department and their families, so I ask with a sincere heart to please vote ‘yes’ on this millage.”

“Let me start by saying I don’t enjoy paying taxes any more than anyone else, but the retirement fund has been under-funded since its inception because of the way the state law mandates,” said Teddy Drummond, council member at large. “The retirement fund has been kicked down the road for a very long time, and this is at least a 20-year fix.

“If these retirees are forced to file a lawsuit to get what was promised to them and the city has to take extreme measures, we’ll all be paying much higher homeowners insurance — much higher than your slight tax increase, I’m afraid.”

Tamira Smith, who represents District B, agreed that it is a pressing issue that requires an immediate solution.

“I cannot change the past,” she said. “However, I would like to encourage all citizens to support this tax proposal, which will secure the retirement fund for city employees. If this tax is passed, the city retirees could be sustained and managed in such a way to secure continued benefits for current retirees.

“I served on the council for the residents of our city and want to do the best for them at this time.”