Commonwealth Journal

October 27, 2013

Cities will struggle if Somerset takes tax

by Chris Harris
Commonwealth Journal

Somerset — While it seems like the City of Somerset and Pulaski County Government are having an awfully difficult time agreeing with each other as of late, the county’s smaller city’s appear to be unanimous on at least one point:

Somerset’s decision to take a bigger chunk of the county’s occupational tax is a fiscal doomsday scenario.

The mayors of Burnside, Eubank, and Ferguson all spoke to the Commonwealth Journal and shared a dire view of what could happen to their cities should Somerset Mayor Eddie Girdler follow through on his stated intention to claim 60 percent of the county’s occupational tax haul come July 1, 2014.

“If they go ahead with this thing, we’re going to have to scrap pretty hard,” said Frey Todd, Mayor of Eubank.

“It wouldn’t be very pleasant to try to deal with,” said Ron Jones, Mayor of Burnside.

“This is not a great moment for the county,” said Allen Dobbs, Mayor of Ferguson.

It’s a big deal for these cities because they currently get a cut of the occupational tax revenue pool, in each case comprising a substantial part of the budget for a city that doesn’t have a large tax base of its own given its limited population.

Currently, Somerset receives about $1.4 million out of the occupational tax haul. Taking 60 percent — as approved by a Somerset City Council vote earlier this year, and recently reaffirmed as a very real plan by Girdler — would bring the county’s largest city over $7 million in revenue from that source.

Meanwhile, the smaller cities make as follows:

• $113,000 to the City of Ferguson.

• $81,000 to the City of Burnside.

• $81,000 to the City of Science Hill.

• $41,000 to the City of Eubank.

Mayor Bill Dick of Science Hill did not immediately return a phone call from the Commonwealth Journal when contacted on Friday. However, Dobbs, Jones and Todd all had the same message: They would probably lose their occupational tax money altogether under the current Somerset scenario.

And each man stressed that such a dollar drain would have catastrophic affects on the services that they’re able to provide for their citizens.

“You’ll see police protection go quickly,” said Dobbs. “A lot of things would change drastically. (Things the tax revenue pays for include) paying officers, upkeep on vehicles. ... It would be pretty close to not having any police protection at all.”

Todd echoed those fears.

“It would really hurt the City of Eubank,” he said of Somerset’s plan. “What occupational tax money we get goes to operate the police department.”

While Dobbs and Jones expected to lose potentially all of their current occupational tax revenue should the larger city take a larger cut (Dobbs estimated it as two-thirds of his city’s total budget), Todd didn’t sound quite so pessimistic, saying the change “wouldn’t affect all of it (what Eubank currently gets),” but didn’t know “exactly what percentage of it” would be gone.

“Whatever it was, it would hurt, because we don’t get enough the way it is,” he said. “It would interrupt our whole budget.”

Dobbs figured that after the police department, Ferguson’s fire department could be the next to go.

“We could lose that,” he said. “If we couldn’t afford police, we couldn’t help fund the dire department. ... All of a sudden, it might go away. It’s kind of a scary situation.”

Burnside is in perhaps a slightly better position to absorb the blow, given their recent vote to allow full alcohol sales. Unlike Ferguson, a fifth-class city, and Eubank, in sixth-class, Burnside’s recent reclassification to fourth-class gave the town the ability to hold an option election to allow retail liquor sales like Somerset has, not just individual drink sales in restaurants.

Jones had publicly touted the benefits of going “wet” so as to make the city’s coffers sturdier in tough economic times. Now, any advantage expanded alcohol sales might have offered the community would be negated under Somerset’s plan.

“I’m thinking that if they take it, the alcohol sales will take us back to where we were,” said Jones. “It will bring us back even, and won’t let us take a step forward at all.”

In a worst-case scenario, “we’d have to start laying off people and cutting back on services if they took that money and we didn’t have something that would hopefully replace it,” said Jones. “We’d be in a heck of a shape.

“I think we would just have to sit back and see what’s the least detrimental to us,” he added. “Can we do with fewer police officers? Fewer people in water or sewer? Can we go to a part-time clerk instead of a full-time clerk? We would have to do something to make up that $90,000 or so. We can’t run in the red.”

Somerset has its own bills to pay, and that’s the reasoning behind taking the money. Girdler told the Commonwealth Journal last week that “(w)e’ve got water lines, sewer lines, natural gas lines that need to be upgraded. There’s a number of programs we have that (the county doesn’t) operate.” There is also the matter of funding the county’s ambulance service, which has swirled at the center of the political maelstrom all year long, with Girdler noting that key spending decisions for EMS need to be made before next July.

Meanwhile, Pulaski County Judge-Executive Barty Bullock called Girdler’s plan “an all-out attack on every citizen in Pulaski County,” as services would be lost, or the county would be forced to drastically raise its currently low property tax rate.

The hostile back-and-forth between the two government entities isn’t sitting well with the mayors of Pulaski’s smaller communities.

“Honestly, I think it’s kind of embarrassing to our county,” said Dobbs. “If you’re a new business looking to locate here and see all the bickering going on between our governing bodies, I don’t think you’ll locate where the governing bodies can’t get along. ... It’s sad that we can’t all work together, put our feelings aside and do what’s right for the county as well as the city.”

Jones noted that those citizens of the city would likely “have kinfolk who live out in the county” who would be adversely affected by the loss in tax revenue distribution.

But there’s not much he can do about it, said Jones. “As the mayor of a little town, I’m just going to have to live with it,” he said. “I don’t think me saying anything to either side would change anybody’s mind about anything.”

If anyone can do anything, it might be the Somerset City Council members themselves. Several of them told the Commonwealth Journal earlier in the week that they’d prefer to rescind the ordinance that passed unanimously earlier this year giving the city the green light to take the larger slice of the  occupational tax pie. It’s something that could happen as early as Monday if councilors decide to act swiftly.

“As far as I’m concerned, we will propose to rescind (the ordinance),” councilor Jim Rutherford told the Commonwealth Journal last week. “We don’t want our neighbors to suffer. ... We were told that we would have the chance to address it before the July 1 deadline to possibly rescind it. That was the talk going into the passing of the ordinance. I would rescind it in a heartbeat.”

Todd indicated that he would “probably” talk to some of the Somerset city councilors personally, but said that it’s “up to the city councilmen at this point” as far as saving the bacon of the smaller towns.

“I don’t think the City of Somerset needs the money that badly,” he said. “We need to leave (the tax revenue) alone if we can.

“I don’t know what’s going on between the city and county,” he added, “but it seems like there’s always something going on that gets things in an uproar.”