PORT ARTHUR — The possibility of raising the tax rate in Port Arthur was not entertained last week, however the idea of realigning and eliminating some positions was considered as officials continued to drill down an estimated $1.8 shortfall.

 Mayor Pro Tem Morris Albright said there’s a lot of workforce combinations that the city is not chasing, but needs to.

“One thing I'd like to look at is trash collection, parks department, ditch cleanups,” Albright said. “Let’s look at the what ifs to contract out all those services to cut fuel, equipment and reduce the full time employees of the city.”

He added he knew that would be a very unpopular option, but wants to keep all options on the table. Another option could be a hiring freeze and realignment of current employees to other divisions — for instance migrating an employee from trash collections into the street division, where contractors are currently providing services.

Mayor Deloris “Bobbie” Prince said that sounds too much like privatization.

“When you privatize, you're at the mercy of that private company,” Prince said. Albright said the city could always change contractors if they are not meeting the needs of the city. Prince questioned how long the city could maintain a level of good service when contractors are being replaced over and over.

“We get to give as many goods and services as we can,” Albright said. “We are not an employment service, how we do that doesn't have to come through being a large employer.”

Officials will also look toward shifting people as others retire or possibly not refill others.

Replacing some contract services with city employees was another option the Council explored.

For instance, the city is looking at saving $700,000 by discontinuing private contracts for trash collection.

“On streets, we’re going to use our crews as much as possible,” Public Works director Ross Blackketter said. In the past, it has been more feasible to have an outside contractor lay asphalt; it takes less time, plus there’s a learning curve.

The current 2009-2010 tax rate is $.792 per $100 of property value. So in order to maintain the same amount of revenue into 2010-2010, the effective tax rate would be $.803.

The effective tax rate is the rate needed to maintain the same revenue from the previous year.

One penny would generate $200,000 in property tax revenue.

While the city did experience a 3.4 percent increase in total land value, it doesn’t feel the full effect of the increase for a variety of reasons.

Port Arthur ranks among the top in terms of a variety of homestead exemptions, including for disabilities and over 65. Currently, there are $396 million in exemptions, which includes $88 million for industry.

The homestead exemption removes 20 percent of a homeowner’s tax obligation. In addition, individuals over 65 receive the exemption plus $25,000 toward their taxes.

For clarification’s sake, the city has one lone tax abatement on the books, while the county has more than 25. Tepco tank farm in Port Acres is now in the third year of its five-year contract before coming on line with tax obligations.

“As a taxing entity, the county is feeling the full effect in moderated abatements,” said Rebecca Underhill, assistant city manager of administration.

The city does, however, have 23 industrial agreements, for companies outside city limits but within the city’s extraterritorial jurisdiction. These industries make negotiated payments instead of paying property taxes to the city. The  agreements are intended toprovide incentives for new projects.

The problem the city is facing is the falling property tax values of the industrial sites, some of which are experiencing as much as a 30 percent decrease. Since about 2009, the city has taken an over $10 million loss — about $32 million in industrial revenue. The city has a valuation floor designated in the agreements, which prevents companies from providing less than a 10 percent revenue contribution.

“We think that wording is probably saving us about $2 million,” Underhill said.

The city’s health insurance administrators have been able to decrease an anticipated liability of $100 million for retirees, with an annual contribution of $7 million, to a $7 million liability with an annual contribution of $600,000.

Officials anticipate a 13.5 percent hike in the cost they pay for health insurance for employees.

Both the insurance and the water utilities programs have undergone major overhauls to deal with historic upward spending trends requiring much cushioning from the General Fund.

Officials are working to remedy the long-time water issues that have required more than $15 million in general fund monies. The city has been diligently replacing thousands of ailing and illegally displaced water meters in an effort to streamline billing and better the methods for reading the meters. Part of this initiative includes massive alleyway cleanups — removal of grown over weeds and gutted cars — involving fines to homeowners who do not comply.

In attempts to get closer to the 50-50 mark in health insurance entitlements, in 2009, the city initiated a five-year phase in requiring retirees with over 30 years service to pay 50 percent toward dependent coverage.

Under the city’s current plan, those choosing pre-Medicare early retirement, currently pay entitlements of $723 a month, including one dependent, and $811 a month for two or more dependents, according to Pat Davis, senior human resources analyst.

Medicare-eligible retirees currently spend $162 a month, $456 with one dependent, or $539 a month for two or more dependents, while active employees pay $286 a month with one dependent, or $360 for two or more dependents.

“Those are subject to change and we are still in the negotiating process,” Davis said. “But obviously we are going to keep rates as low as we can.”

The city has also applied for funds through the Temporary Reinsurance Program for employers insuring retirees age 55 and older as part of new healthcare reform. An estimated $5 billion will be doled out on a first-come, first-serve basis. The program pays 80 percent of claims costs between $15,000 and $90,000 annually.

While the city is already feeling the administrative effects of the new healthcare reform, the elimination of Medicare Part D reimbursements to healthcare providers for assisting seniors with prescription drugs will take place in 2013.

Currently, the city receives an estimated $45,000 in government subsidies through its employee health program.

Another revenue source that will be discussed further in the budget season regards the second round of Ike funding.

“This redistribution basically does give more than requested, however, it still has to be voted on,” said city manager Steve Fitzgibbons.

Regionally, the Orange, Hardin and Jefferson counties’ overall allocation will be $317,492,059. Port Arthur submitted about $60 million in appraised needs and could be looking at an estimated $11 million depending on the Southeast Regional Planning Commission’s determination.

“Lots of times he can talk you to death, and other times he could talk you into millions of dollars,” said Mayor Deloris Prince regarding the efforts of Fitzgibbons in leading the city’s application process.

Some of Ike Round I — which was $14 million — is also reflected quite a bit in the budget, officials said.

Landfill revenue is also delivering a whopping punch to the budget leaning an estimated $2 million over budget. The department is looking at reducing hours, cutting overtime and doing a part-time Saturday, the lightest day in the week.

“We will be saving a days cover, a $100,000 savings a year,” Fitzgibbons said.

Residents could also see a garbage bill increase. A $1 raise, would amount to about $200,000 in annual savings.

smartinez@panews.com