Due to quickly depleting reserves in the Daviess County Fiscal Court budget and a high need for more revenue to cover many important costs across the county, officials are in talks about raising the occupational tax for residents in the near future.
The increased occupational tax could possibly pull Fiscal Court out of a $2.5 million deficit that’s come in large part from pension reform costs across the county and improvements at the Daviess County Detention Center.
However, no proposal has yet been made to increase the county’s occupational tax. Daviess County Judge-Executive Al Mattingly said, for now, it’s just one idea that may work to increase revenue.
“Right now, nothing’s been done. Nothing’s final,” Mattingly said. “We either increase our revenue or we cut our budget. We’re extremely low in the realm of occupational taxes. Perhaps the commission wants to cut the budget.”
Mattingly said he believes the budget is already running on fumes as it is, and that an increase in revenue may be necessary to cover costs for the many improvements needed across the county. Some of these needs include $1 million for new voting machines, $5-7 million for a new radio system for the county fire departments and a jail budget that totals more than $800,000 for this fiscal year.
Even more, a new pension system adopted two years ago has cost the county $1.5 million in additional costs. After next year, Mattingly said, the county will pay in $1.5 million on a year-to-year basis to cover pension costs.
“We don’t have the revenue increase to cover that cost,” Mattingly said.
According to KRS-68.197, county officials are able to impose a 1 percent occupational tax increase.
“My recommendation is, we take a 65 cent addition to the current 35 cent rate,” Mattingly said. “We’d present it in a two-step process. We’d raise the tax .35 cents in January 2020, and we’d raise it another 30 cents in January 2021.”
Mattingly said if the second increase isn’t needed, county commissioners could vote to table the second 30-cent increase. Mattingly said the county has done a good job of getting by without having to impose a tax increase on its citizens. The last major tax increase took place 10 years ago when Fiscal Court imposed an insurance tax increase to help pay for $20 million in costs that went toward the convention center.
“Since I’ve been here the county has been cutting budgets and rebidding services,” Mattingly said. “I can tell you, there’s no fraud or waste in our budget. We refinanced bonds [for the convention center] in 2015. We’ll pay that debt off seven years early [in 2022]. Then we’ll take the insurance tax rate back down.”
If imposed, the tax increase would add 35 cents to every $100 earned by residents. Mattingly said Fiscal Court has big plans for the extra revenue.
“Those taxes pay for a lot of things in the county and city,” Mattingly said. “We [county commissioners] aren’t immune to it either. The cost of living goes up, and we’ve given employees a cost of living pay increase. That doesn’t leave much in the way of buying new equipment. Firefighters turn-out gear costs a couple thousand dollars apiece. Right now, we’re not able to help them out.”
Mattingly said county commissioners will further discuss options for increasing revenue at next month’s Fiscal Court meeting.
