During these tough economic times, can you name a city in Kentucky, or even in the nation, without money problems?
The answer: Somerset, Ky.
Mayor Eddie Girdler didn’t come right out and say so Tuesday during his annual State of the City address to the Somerset-Pulaski County Chamber of Commerce, but he told a reporter the city has no problems meeting an $80 million annual budget. “Yes,” he said, “Somerset is one of the most affluent 3rd-class cities in Kentucky.”
A major part of Somerset’s income comes from its network of natural gas lines extending from Hyden in Leslie County to Russell County. Not only does the city get paid for transporting natural gas from formerly landlocked wells in Eastern Kentucky, but a prototype natural gas processing facility located near the Pulaski-Laurel county line is processing liquids out of natural gas that sell at 80 percent of the price of crude oil. Currently the byproducts, formerly hauled away, sell for $80 a barrel.
“This process started last year and has been an amazing financial success,” the mayor said. He predicted an income of between $10 million and $15 million from sale of these byproducts during the next five years.
“More than 5,000 jobs are directly linked to the city’s natural gas pipeline network, now valued at more than $100 million,” the mayor said. He is convinced natural gas, because of stiff environmental regulations, will be an alternative to coal as fuel for electric generating plants.
“Our pipeline has capability of joining three interstate pipeline systems that flow from the Gulf to Canada. We had sessions with one of the largest natural gas transmission companies in Houston (and we) are planning to install high tech and computer-based natural gas operations at our proposed energy center. Somerset can become one of the regional leaders in the United States, and that is our goal,” he remarked.
Girdler said the proposed energy center, subject to approval by city council and U.S. Department of Agriculture/Rural Development, would house the most technical and advanced energy monitoring system in the nation.
The mayor’s State of the City address had an undertone plea for cooperation; encouraging a willingness to become part of the city. “How can a city of less than 12,000 support a county with 66,000 people?” he asked. “Somerset doesn’t need the county. The county needs Somerset.”
Girdler alluded to the city’s planned “voluntary for now” annexation that would take in more than 23 square miles, 4,770 houses and 10,088 people. The incorporated territory would increase the city’s population from 11,196 to 21,284 and qualify for an upgrade from 3rd class to 2nd Class.
“Without annexation in some form, economic growth and good paying jobs will be limited,” he said, adding: “Somerset may be forced, because of state law, to restrict additional services for new industrial plants or businesses. State law limits cities with populations under 15,000 to no more than 5 percent of assessed value for issuance of general obligation bonds. That would be $45 million, in Somerset’s case,” Girdler said. “If we get over 15,000 (population), that goes to 10 percent, or $90 million.”
Among his points were that Somerset’s existing water plant is sufficient for citizens within the corporate limits, However, he and Somerset City Council are embarked on building a $25 million state-of-the-art water plant to serve 110,000 people in five municipalities and five counties. Eighty percent of water produced by Somerset Water Service goes outside the city, Girdler noted. “A higher sense of public value should prevail,” he said, explaining reasoning behind the city’s decision to build the plant.
The city has just completed a $15 million wastewater treatment plant that, like the new water plant, is essential for new jobs, retaining existing jobs and protecting our environment, including Lake Cumberland, Girdler pointed out.
Among the mayor’s projects in 2012 are to reduce high gasoline prices, and an ordinance will be proposed to ban smoking in public places within the city.
“Yes, Somerset has looked in detail at the extremely high retail gasoline issue in Somerset,” said Girdler. “And, we’re going to do something about it.”
“Based on our review, there is no economic reason for high gasoline prices in Somerset,” the mayor said. “The city is going to start a trend of reducing gasoline prices by changing the way we do business. We can save $100,000 annually in our budget by using our own system, hopefully approved by U.S. Rural Development and a local bank. This may be implemented within the next 60 days.
“The city will be a leader in confronting economic forces that keep our gasoline prices artificially high. We may be beaten back but 2012 will be a start in protecting our investments,” Girdler promised.
Girdler indicated the city may make an effort to change municipal allocations of the county’s 1 percent occupational tax, now based on per capita.
“We will look at modifying old contracts under the occupational tax system that have not been changed since 1995 and are useless for the city’s future needs,” Girdler said. “We still feel the county should take the lead, but the present process does not allow the city to leverage those dollars for bond purposes since we are a third party.”