As the federal government phases out the penny, the City of Cody is beginning to do the same.

Although the city will continue to accept pennies, as of Dec. 22, it is no longer handing them out as change and is rounding cash transactions down to the nearest 5 cents. A $1.04 purchase, for example, will become just $1 if paid in cash.

However, nothing will change for those paying for city services by credit or debit cards, checks or via online payments: Those transactions will continue to be charged down to the nearest cent.

The U.S. Mint formally ended production of the penny last month at the direction of President Donald Trump. The Mint says it spent about 3.69 cents to produce each 1 cent coin and expects to save about $56 million each year by no longer making them.

However, retailers and others who deal in cash now have to figure out how to manage a penniless future — especially as the amount of 1 cent coins in circulation begins to dwindle.

The Federal Reserve Bank of Richmond warned in a July economic brief that the penny’s elimination could result in a “rounding tax,” as a disproportionate share of prices end in 3, 4, 8 or 9 cents and would typically be rounded up. The Fed branch estimated that cash customers across the country could collectively end up paying an additional $6 million every year.

But there will be no such increase for City of Cody customers, since the city has decided to round all prices down. 

City Finance Officer Leslie Brumage said she made that recommendation “based on the concern that customers would feel they were being charged more than what is due on their bills” if totals were rounded up.

Each department will track the cents lost to the new rounding system, but the city expects to only miss out on about $100 per year.