Column: Salaries, taxes and difficult choices

  • Posted: Tuesday, June 3, 2014 12:01 a.m.

The dominant theme at the May 27 County Council budgetary work session was that the current salary ranges for County employees are obsolete, leading to attrition and difficulties in attracting qualified new hires.

These salary ranges determine starting salaries for the various positions, the highest attainable salaries and the calculated mid-points.

Due to the Great Recession, these ranges haven’t been adjusted upward since 2007.

With starting salaries unchanged for seven years, coupled with several years of no salary increases, high turnover is noticeable in several departments. These include EMTs, assessors and deputies in the sheriff’s office.

This concern drives Sheriff Mike Hunt’s request for 20 percent salary increases in his department, which will cost $2.3 million next year.

Hunt’s alternate proposal is only slightly less expensive, which increases sheriff’s office and detention center salaries by a flat $7,000. Given the 260 positions in these two departments, this costs approximately $1.8 million.

Several on Council, however, are worried about the county-wide organization and not just the sheriff’s office.

This led to alternate – but somewhat overlapping – proposals to adjust all of the County’s salary ranges.

In an exchange between Councilwoman Kathy Rawls and Administrator Clay Killian, two basic alternatives were outlined for increasing the County’s salary ranges.

The first alternative increases all ranges by 5 percent, gives a 2 percent raise to employees in the bottom quartile and a 1 percent raise to employees in the second quartile, and costs a little more than $500,000.

The second alternative increases all ranges by 10 percent, gives raises similar to the first alternative and costs a little less than $1 million per year.

Both alternatives increase starting salaries, making it easier to attract and hire competent, qualified employees, and give the lowest paid employees a small boost to their paychecks.

Clearly, adopting either of Hunt’s proposals, or one of the broader alternatives increasing ranges across the entire organization – either singly or in combination – will be expensive. This led to a discussion of possible tax increases.

The first option takes advantage of a loophole in state law for a one-time millage rate increase in excess of the statutory tax hike limitations.

Recall that per state code 6-1-320, millage hikes in a given year are limited by the combined percentage increases in population growth and inflation. For the upcoming fiscal year, this equates to 2 percent, or a hike of 1.4 mills.

The law, however, allows Council to raise taxes by “any such increase, allowed but not previously imposed, for the three property tax years preceding the year to which the current limit applies.”

This three year “look back” allows Council to raise millage over 5 mills instead of the one-year limit of 1.4 mills.

A second, more radical option proposed by Councilman Chuck Smith institutes a countywide business license similar to what the cities of Aiken and North Augusta impose.

According to Smith, if taxpayers desire more services from the County, and if municipalities already impose business licenses, then in fairness to all County residents Council should explore this potential revenue source.

While the amount that can be raised from a business license is currently unknown, and given that it will take at least until midyear to implement, Smith favors it as a “user fee” to offset the cost of services benefitting businesses in the County.

Any of these options, however, are problematical, as are any fee increases allowing millage shifts from the road maintenance and solid waste funds to the general fund.

With per capita income across the County down, and with weekly wages falling, it’s apparent that while the Great Recession may be officially over, the recovery locally remains tepid at best.

And as the discussion of tax hikes continues, the odds of voter approval for the next round of the Capital Project Sales Tax recedes further into the distance.

A tax hike may solve certain problems today, but it risks a long-term fiscal disaster if it jeopardizes the Capital Project Sales Tax.

What are Council’s options?

Council can do nothing, and continue with its uncompetitive pay structure.

Council can raise taxes and fees to resolve the problem, but at the cost of endangering the Capital Project Sales Tax.

Or more creatively, Council can scrub the revenue side of the budget, reprioritize spending, eliminate less important expenditures, and perhaps opt for a smaller, but better-paid work force.

While all of these choices are difficult, the last option is Council’s best bet to square the budgetary circle. But does Council have the will to make the tough choices this entails?

Gary Bunker is a former Aiken County Councilman.

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