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Mayor Woodfin proposes one-time $5K payment to full-time city employees

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The Birmingham Times

Birmingham Mayor Randall Woodfin said he wants to give each full-time city employee a one-time $5K payment.

In a letter to city workers, Woodfin said he wanted to show his gratitude for employees and “their continued service during this pandemic.” Part-time employees with the city will receive a one-time payment of $2,500.

The mayor said he plans to present this recommendation for the “premium payment” to the City Council on June 1 and the Jefferson County Personnel Board on June 8.

Woodfin said the COVID-19 pandemic created a “difficult, trying year that tested families in unimaginable ways.”

He said workers “worked through unforeseen obstacles, constantly adjusted and adapted, and maintained the high level of service that our community expects.”

“Now, as our city begins its recovery, it’s my duty to make sure our city employees and their families are also supported as we continue to work through the pandemic,” Woodfin said. “While we have proposed an operating budget that provides a cost of living raise, merit and longevity pay and a fully funded pension, we want to do more.”

Here’s the letter that went to city employees from the mayor:

Dear Valued City of Birmingham Employee,

The pandemic created a difficult, trying year that tested our city – and our families – in unimaginable ways.

No matter the challenge, your continued service and commitment to the City of Birmingham has never wavered. You worked through unforeseen obstacles, constantly adjusted and adapted, and maintained the high level of service that our community expects.

For that, I speak for our community when I say we’re grateful.

Now, as our city begins its recovery, it’s my duty to make sure our city employees and their families are also supported as we continue to work through the pandemic. While we have proposed an operating budget that provides a cost of living raise, merit and longevity pay and a fully funded pension, we want to do more.

I’m very happy to announce that  as part of the Magic City Recovery Plan, which is funded through the Biden Administration’s American Rescue Plan of 2021, we will recommend full time employees with the City of Birmingham receive a one-time premium payment of $5,000 for their continued service during this pandemic. Part time employees with the City of Birmingham will receive a one-time premium payment of $2,500 for their continued service during this pandemic.

I will present this recommendation to the City Council and the Jefferson County Personnel Board for their consideration in order to provide this pay before the end of the fiscal year on June 30, 2021. I want to thank Councilor Hunter Williams, Council President William Parker, President Pro Tempore Wardine Alexander and all the members of the City Council for their continued support of our employees.

The premium pay is taxable income; however, no pension contributions will be deducted from this pay. As some of you know, premium payments such as these may be subject to a higher federal income tax deduction. These payments could be subject to a mandatory 25% federal taxation rate. We are communicating with the U.S. Department of Treasury on the final taxation rate for this one-time premium payment. Employees will be notified once the city receives the final guidance on the taxation rate.

In addition, the city is developing a voluntary buy-out program of excess vacation hours for  eligible employees.  The program will be offered only to individuals who were limited or prohibited from taking vacation during calendar year 2020.  The buy-out will only be applicable to hours in excess of 320 hours (or 424 hours for 24-hour firefighter positions).

As many of us take a break for the Memorial Day weekend, I want to again offer my heartfelt thanks to each of you for your service to the people of our city.

Sincerely,

Randall L. Woodfin
Mayor

Click here to watch a video message from Mayor Woodfin. 

Click here to view a PDF of Mayor Woodfin’s letter.

Check this page for updates. For additional questions about this announcement, you can email humanresources@birminghamal.gov.

Below are frequently asked questions (FAQs) about the proposed premium payment.

  • When will Mayor Woodfin present the premium pay proposal to the Birmingham City Council for approval? Tuesday, June 1
  • When will Mayor Woodfin present the premium pay proposal to the Jefferson County Personnel Board for approval? Tuesday, June 8. The personnel board meeting is public, and its virtual meeting will be held at 1:30 p.m. The link is www.pbjcal.org.
  • How soon can I expect to see the money? Depending on if the Birmingham City Council and the Jefferson County Personnel Board approve the premium pay, the City of Birmingham will work to secure payment for employees by June 30.
  • Will this be paid in one lump sum or over several weeks? One lump sum.
  • I retired in early May 2021. Do I qualify for the premium payment? No. You must be an active City of Birmingham employee by June 4, 2021 to qualify for the payment.
  • Is this taxable income? Yes.
  • If this is taxable income, how much will be removed from the $5,000 for full-time employees and $2,500 for part-time employees? Tax deductions on this money will include Social Security (FICA) at 6.2 percent; Medicare at 1.45 percent; occupational tax at 1 percent; your federal income tax; and whatever your applicable state tax is, which is determined by the number of exemptions you have claimed.
  • How much tax will be removed for state taxes? That depends on the number of exemptions you claim.
  • Will the amount of tax that could be removed be the same for everyone? No, the amount of taxes paid depends on a variety of factors, including the number of exemptions that you claim.
  • Will you take out money for the pension and/or healthcare? No. There will be no deductions for the pension or healthcare costs.
  • Can I elect to have no tax deductions taken from this money? The City of Birmingham is currently in communication with the Department of Treasury to determine if this payment is subject to the mandatory 25% tax rate applicable to bonus payments. Additionally, this payment is subject to the required FICA, Medicare, state and local taxes.
  • Where can I go if I have more questions? Send them to humanresources@birminghamal.gov.