A proposed massive occupational tax restructuring that would have the City of Somerset laying claim to a bigger part of the revenue than in the past has led to a heated back-and-forth between county and city officials.
But a closer study of the city’s proposed numbers may show that the disagreement was much ado about nothing.
“Our goal is to work with the city,” said Pulaski County Judge-executive Barty Bullock last week, just a few days after returning to work after a bout with diverticulitis. “(The new scenario) sounds a lot better ... I’m excited to take a look at it.”
City of Somerset Budget Director Jimmy Hogg said on Thursday that the city has never intended to take as big a slice of the occupational pie as many may think. Hogg said the city has only moved forward with claiming 60 percent of the tax revenue generated within the city limits.
“The individual person won’t see a difference,” said Hogg. “The businesses won’t see a difference in net profit, it’s just that they’ll pay the tax to two different places.”
So that means that out of the tax revenue that comes from within the city limits, 60 percent of that will go to the city’s coffers, while 40 percent will stay with the county.
Pulaski County Treasurer Joan Isaacs, upon studying Hogg’s numbers, said the scenario is definitely a more doable one.
“I could at least sleep at night with these numbers,” said Isaacs.
The county had foreshadowed a “doomsday” scenario should the city take a bigger chunk of the occupational tax pie, with Isaacs saying the city may claim as much as $7 million of the total occupational tax revenue, which totaled out to around $9.6 million in the 2013 fiscal year.
But that total was based on the assumption that the city would be taking the entirety of the tax that’s generated within city limits — an estimated number that could be anywhere between 60 percent of the total occupational tax revenue or 70 percent.
“What is the percentage of the tax that’s collected in the city limits? Nobody knows,” said Hogg.
If Hogg’s numbers stay true — that the city will take 60 percent of the tax revenue generated in the city — that means the city will claim $3,890,676.45 after the first full fiscal year following the July 2014 restructuring. That’s $1,226,750.66 more than the city received during the 2013 fiscal year, not including an additional $200,000 the county has pledged toward EMS funding for the city.
The city now receives $1.4 million from the county for EMS operations, a number decided by the two entities earlier this year after the two disagreed over funding sources for EMS in the face of budget cuts and rising costs.
Somerset currently also claims an additional $1.4 million, as a city located within the county, which brings its yearly total to around $2.8 million, including the county’s additional EMS funds.
Under the new occupational tax structure, the county would not be required to provide EMS funding to the city, according to Somerset City Attorney Carrie Wiese. Wiese said the city will fund EMS out of its own occupational tax revenue.
Bullock is ready to move forward with the new numbers and hopefully work out the situation with city officials.
“We need to work together ... if we can do that, I’ll be tickled pink,” said Bullock.
Isaacs said this scenario, while better, still isn’t a walk in the park.
“Cuts would still have to be made,” said Isaacs. “ ... Things will have to be reworked ... we’ll be down, but we won’t be out.”
The county currently either completely or partly funds Pulaski County 911, the Pulaski County Detention Center, and the Lake Cumberland Airport through the occupational tax, along with EMS. After those entities are taken care of, the county funnels occupational tax revenue into its general fund, road fund, Somerset-Pulaski County Economic Development Foundation, and to the county’s five cities, including Somerset.
Rita Curry, deputy judge-executive under Bullock, said this new situation is much more acceptable for the county’s finances.
“Nobody likes to cut, but we’ve all had to do it,” said Curry. “At least with this, you can look at this and still see keeping your head above water.”
Curry said the county may even get by without having to increase property rates or enact new taxes.
But, better situation or not, there are still many details to be worked out — most importantly the future of the county’s small cities, all of which receive a cut of the occupational tax revenue.
Wiese said no one has yet approached the leaders of the county’s small cities — Mayor Frey Todd (Eubank), Mayor Ron Jones (Burnside), Mayor Allen Dobbs (Ferguson) and Mayor Bill Dick (Science Hill) — to make an official proposal.
But Wiese said because the cities are located in Pulaski County, the city had always “dealt with the county on that.”
In the 2013 fiscal year, Burnside received $81,907.25, Ferguson received $113,282.57, Science Hill received $81,521.42, and Eubank received $41,661.29.
Dobbs, Todd and Jones all told the Commonwealth Journal that to lose their occupational tax funding would be disastrous. All three men indicated that they hadn’t held any official talks with Mayor Eddie Girdler or other city officials on the situation.
And county officials have said there is no way the cities can be left with no funding.
“We all fit together to make up the whole house,” said Bullock. “We can’t leave them out there alone.”
Dick, when contacted last week about the situation, said he had not spoken to anyone with the city or county on the issue, but he did say that he “heard a rumor” when the issue came up in January that the smaller cities wouldn’t suffer as a result of the restructuring.
“I heard that the cities would not be hurt from it,” said Dick.
Wiese confirmed that thought, and said on Friday that regardless of how the negotiations end up, the cities “are going to be covered.
“Somerset has never had the intention of ... leaving them out on their own,” said Wiese.
Wiese said another goal of the city has been to possibly enter into a cooperative agreement with the county on operating the Somerset-Pulaski County Development Foundation. Although both entities are included in the name, the foundation has been largely county-run — with spots dedicated to the Somerset mayor and business owners, along with the county judge-executive.
Wiese said the city does not want the foundation, which receives about $1.1 million yearly from the occupational tax revenue, to be cut as a result of the tax system shake-up.
“That’s not good for anybody,” said Wiese, who mentioned the city would be willing to work together with the county in operating the foundation jointly, or even taking the foundation “under our wing” if need be. “We have a lot in our pocket we can offer these businesses to help recruit them here.”