There is no significance difference in “guestimates” by Somerset and Pulaski County officials on how much of the county’s 1 percent occupational tax revenue will shift to city coffers when Somerset on July 1 implements a similar tax. An already approved city ordinance will levy a 6/10 of a percent occupational and net profit tax that will ake 60 percent of the county’s occupational tax revenue collected within the city.
Joan Isaacs, treasurer of Pulaski County, estimates the city will get between $4 million and $4.5 million annually. This is 48 percent of the total tax revenue, based on $9.3 million the tax generated for the county last year.
Jimmy Hogg, budget director for Somerset, put the city’s tax gleanings at $4.086 million annually, based on his guess that 70 percent of employees paying the tax work inside the city limits.
“That’s the unknown factor,” said Hogg. “There is no way of knowing exactly what percentage of workers are employed by city businesses.”
The city’s 6/10 of a percent payroll tax affects only employees and businesses within the corporate limits.
There are differences of opinion about what effect the city occupational tax grab will have on the county’s annual budget of about $30 million. Isaacs says payroll tax gleanings provide the “biggest chunk” of money for the budget. Remainder of budget revenue sources include property taxes, County Road Aid money from the state, and grants.
Some county officials have commented privately that the city payroll tax will be “devastating” to the county. Others, like Judge-Executive Steve Kelley, appear more optimistic.
Kelley, a former Somerset city councilor, says he and Somerset Mayor Eddie Girdler are good friends and have had “productive meetings” about the tax situation.
Somerset City Attorney Carrie Wiese agrees. She said the city and county are trying to make the city and county occupational taxes “revenue neutral ... so it won’t hurt the county’s budget this year.”
The city currently gets about $1.3 million annually from the county’s occupational tax on a per capita basis. Also, the county pays the city about $1.4 million annually from the tax to operate Somerset-Pulaski County Emergency Medical Service. These funds will not come from the county once the city starts collecting an occupational tax, Wiese said.
“The city is trying to balance it ... so we collect some of the tax and the county collects some; so we don’t hurt the county and the smaller cities that benefit from the tax,” Wiese said.
With a population of more than 60,000 Pulaski County residents who pay a county payroll tax and a payroll tax to a city are allowed to credit their city tax against their county tax. The purpose of this state law is to prevent city residents from paying both a county fee and a city fee.
Pulaski County’s 1 percent occupational tax was enacted in 1987 during the administration of Judge-Executive Darrell BeShears. The tax revenue elevated Pulaski County from “poverty status” to sound financial footing.