The IRS always wants their share

What started out as a way to provide low cost security for the former Alexander Human Development Center (HDC) property and give city employees a way to live in Alexander without a major cost to them, may be considered income by the Internal Revenue Service. The plan was first adopted when former Mayor Paul Mitchell was in office.

In 2022 the former HDC property was being vandalized after Pathfinders, Inc. moved to a new location outside Alexander. Pathfinders provided specialized services to those with physical and mental needs.

The cottages were used to house the patients. They are located in the southeast corner of the property along Highway 111.

With no one on the property at night, vandalism began to become an expensive problem. Mitchell decided it would be beneficial to allow city employees, who live outside Alexander, to live in the cottages in exchange for providing both security and keeping the grass mowed. At the time, no city employees lived in Alexander.

Those living in the cottages generally worked for either the street or police departments. This arrangement provided the extra advantage of having city employees nearby in case of emergencies.

In the past, City Attorney Chris Madison has expressed concerns that a low $100 per month will require the city to account for the remaining value of the rent as a fringe benefit on W2 forms. It will then be taxed by the IRS. Council members were told employees can be given two options.

1-They claim the fringe benefit at the end of the year on their W2.

2-The council sets a rent amount that is high enough to not require a fringe benefit report on W2s.

Madison told council members a fair market value needs to be established. Hiring someone to perform that task is the next step.

The other item under New Business at the Feb. 17 meeting;

The Alexander City Council adopted a resolution that finalized the dollar amounts on numerous line items in the 2025 budget. Below is a list of the estimated and actual revenue and expenses for 2025.

General Fund Budget

Estimated Revenue - $1,519,092.53

Actual Revenue -        $3,701,194.16

Estimated Expense - $1,612,131.53

Actual Expense -        $1,366,613.43

Street Department Budget

Estimated Revenue - $350,400.00

Actual Revenue -        $498,917.15

Estimated Expense - $323,200.00

Actual Expense -        $342,541.38

Parks Department Budget

Estimated Revenue - $297,800.00

Actual Revenue -        $228,518.21

Estimated Expense - $292,000.00

Actual Expense -        $154,752.58

Police Department Budget

Estimated Revenue - $1,061,730.00

Actual Revenue -        $912,943.65

Estimated Expense - $1,051,972.00

Actual Expense -        $911,659.65

Fire Department Budget

Estimated Revenue - $1,201,400.00

Actual Revenue -        $1,030,389.15

Estimated Expense - $1,195,900.43

Actual Expense -        $1,056,622.78

Payroll Fund Budget

Estimated Revenue - $2,235,517.00

Actual Revenue -        $1,794,595.00

Estimated Expense - $2,231,517.00

Actual Expense -        $1,765,111.86

In other news

Mayor Crystal Herrmann gave a brief report on the city’s permitting system. She noted there is no permit requirement for building a porch. Her fear is the porch will turn into a sun room with someone living in it.

Also, permits aren’t being posted. With the police department now taking over code enforcement, Herrmann wants the officers to be able to drive past a property and know any observed construction has been approved. With that in mind the mayor has proposed the city provide posting boxes to be used to display the permit on the property.

Next Meeting

The next meeting of the Alexander City Council is Monday, March 16, at 6:00 pm in the courtroom of the Alexander Municipal Complex (City Hall). Meetings are open to the public.