City employees will receive an average 7.5 percent increase in pay and benefits, in $17.8 million budget approved by the Andalusia City Council yesterday. The new fiscal year begins today.

The pay increase comes with the council’s decision to change its pay and classification plan.

Mayor Earl Johnson explained that in the current plan, employees get automatic step raises each year for the first 16 years they are employed.

“They got those raises, no matter how good of an employee they were,” he said. “If you had two employees at the same class and grade, and one employee went beyond all expectations in hard work, attitude, and helping others, and the other didn’t, they both got the same raise.”

The council agreed to move all employees up two classifications under the current plan. Beginning next year, employees will not receive automatic step raises, he said. Instead, the council will designate a specific amount for pay raises, and department heads will award raises based on performance reviews. Prior to that time, the city will hire a consultant to train department heads.

The new pay plan also addresses new Department of Labor overtime rules that become effective in December, he said.

“This is a huge step for this city to get our fiscal house in much better shape,” Johnson said. “This gives us a lot better control over wages and salaries.”

Despite the pay increase, the total budget expense increased on 0.32 percent, the mayor said.

The budget also pays $2.3 million in long-term debt.

“Apparently there is a lot of talk out in the community that we are just spending money like drunk sailors on shore leave,” Johnson said. “There’s also talk that we’re incurring a lot of debt, and not paying debt off. That’s not true, either.”

Johnson said the city actually reduced it long-term debt by $4 million in current administration, before the financing for current downtown projects was put in place.

In addition, he said, by entering an agreement with Opp and the county on airport debt, and refinancing its portion, the city reduced its debt exposure by $8 million.

“We instituted a new fiscal policy in 2012 that tightly controlled expenses and dramatically increased reserves,” Johnson said. “The 2017 budget expands that process by taking control of our single, largest expense, which is salaries.”

Budget totals, broken down by departments, follow (see chart):

• Administration – $ 2,865,289
• Planning and Development – 2,853,034
• Police – $2,343,899
• Fire – $1,464,298
• Public works – $2,328,447
• Education – $2,341,000
• Long-term debt – $2,347,000
• Miscellaneous – $742,000
• Contingency – $347,028
• Capital Improvement – $526,824