Fiscal court likely to implement payroll tax

-A A +A

Members of Grant County Fiscal Court told citizens on Feb. 13 that a 2 percent payroll tax is likely their answer to the impending budget shortfall, along with spending reductions to each department.

Executive-Judge Steve Wood read a statement to begin the caucus meeting and addressed several ideas floated in prior meetings. He said borrowing from the public library’s $2 million surplus was not a legal option, nor was closing the jail, which constitutes about 35 percent of the Fiscal Court budget.

Wood said the available decisions were all difficult for him, but that the county has reached the point where it can no longer live off its reserve funds and needs a revenue stream. He also asked if the other magistrates would cease holding private meetings with local business owners without his knowledge.
“I know it’s going to be tough, but it could be a lot tougher if we don’t take action,” Wood said of the proposed payroll tax.

Wood provided packets to the citizens detailing the budget line items on which the Fiscal Court could possibly not spend funds. The data noted that 1,995 workers commute to Grant County, while 6,944 workers commute from Grant County.
District 1 Magistrate Jacqalynn Riley and District 3 Magistrate Bobby Newman acknowledged that there is fat in the budget that needs to be cut, but that the county still needs a revenue stream to compensate for inflation over the past 20 years.

“There’s been a lot of inaccurate (claims) tossed around that we can cut our way out of this,” Riley said. “We have maintained a lifestyle we cannot afford.”

The Grant County Fiscal Court mostly operates off income from the property tax. Newman and other Fiscal Court members noted that most other counties in the area have a payroll tax.

“We have got to do something to make this work, whether we like it or not,” Newman said.
Newman and Riley met with several small business leaders on Feb. 9 to discuss budget cuts but maintained that a tax would more than likely be necessary to create a revenue stream.

Keith Kinmon of Kinmon Steel, who has been meeting privately with magistrates along with other local business leaders to give financial advice, said he had visited the Department of Local Government in Frankfort, and that they told him such a high percentage on the payroll tax wasn’t necessary if budget reductions were enacted as well. Wood disagreed.

Kinmon also said the Department of Local Government said they were hesitant to work with the Fiscal Court because they appeared “dysfunctional.”

Court members went line-by-line through budget departments and discussed proposed expenditure reductions, such as holding off purchases for two sheriff vehicles and potentially eliminating or reducing parks and recreation, and letting the road department perform park maintenance. All proposed cuts combined would save around $500,000.

Riley said the court needed to do a better job publishing the proposed cuts to the community and to department members. The proposed solutions need to be enacted before March 1 to avoid the looming shortfall, Riley said.

Court members said a 2 percent payroll tax would raise $3.4 million, addressing the $2.5 million shortfall. Wood noted that the county still owes $5.2 million on the jail, and that surplus funds would be used to pay off portions of the debt.
At increasing percentages, the payroll tax would produce:
1 percent - $1.7 million
1.25 percent - $2.125 million
1.5 percent - $2.55 million
1.7 percent - $2.975 million
2 percent - $3.4 million

Citizens noted that last week’s proposed ordinance featured not only a 2 percent payroll, but also a 2 percent business net profit tax. Wood said the business tax is no longer on the table. He also said the tax would not feature a sunset clause, but that the court would regularly monitor spending habits, and that the information would be available to the public via open records law.

Citizens continued to voice their concerns and suggestions. One concerned citizen suggested that Grant County employees start to pay a higher percentage of their health insurance costs as a way to save revenue. Another citizen said she is concerned the Fiscal Court won’t change their spending habits even if a payroll tax is implemented to raise revenue.

“We have to make sure as a community and as a county and as elected officials that it won’t happen again,” Iron Crow Inc. Director Bren Murphy said. “What policies and procedures are we putting in place to make sure that this circle doesn’t continue?”

She then told other citizens in the court to “get ready” for the payroll tax because it’s coming, but to be prepared to hold court members accountable.

District 2 Magistrate Shawna Coldiron said she empathized with the citizen’s concerns, and that the court members have their hands tied as to how to address the jail, which they said brought the county’s financial problems to the light.

“I think we’ve got a very volatile beast in this county that we can’t control,” Coldiron said in reference to the jail. “I just don’t know why.”

The Fiscal Court will go broke by June 1 unless a revenue stream is created. The court will hold a regularly scheduled meeting on Feb. 20 at 7 p.m., where they will have a first reading for the proposed tax.