Council expresses interest in ‘sunset’ clause for occupational tax changes
By JIM BROOKS
Nelson County Gazette
Bardstown Mayor Bill Sheckles
Tuesday, June 07, 2011, 11:55 p.m. – Members of the Bardstown City Council discussed their options regarding changing the city’s occupational tax Tuesday evening at its monthly working session at the city hall annex building.
The city’s current occupational tax has a rate of ½ of one percent applied to income between $15,000 and $75,000 earned in the city limits. The first $15,000 is exempt because it is subject to the county’s occupational tax.
At a public hearing last Thursday, Mayor Bill Sheckles offered two options for raising more revenue using the city’s occupational tax.
The first option is to leave the tax rate the same, but would remove the exemption on the first $15,000 of income. This option removes the cap on taxable income, so all earnings over $75,000 would be subject to the tax.
The second option is to leave the exemption on the first $15,000 of income and double the tax rate to 1 percent of income. This option also removes the cap on taxable income subject to the tax.
In discussion about the budget, several council members expressed interest in the first option of keeping the rate the same.
From left, Councilmen Tommy Reed, Roland Williams.
Councilmen Tommy Reed and Roland Williams expressed interest in adding a “sunset clause” if the budget requires more revenue from the occupational tax.
Williams and Reed credited a constituent who approached them after last week’s public hearing and discussed the idea of a sunset clause for any changes to the occupational tax. Reed said that since there’s no way to predict how much revenue removing the cap from the occupational tax might generate, the council should re-examine the changes.
“It would be good to do this and look at it again down the road and see what we’re doing here,” Reed said. “At least to say we’re going to revisit it would be good stewardship.”
Councilman Fred Hagan
Councilman Fred Hagan also expressed an interest in a sunset clause.
Either option for bringing in more revenue with the occupational tax will generate approximately $800,000 in a full year of collection and possibly more. The tax hike comes at a time when the city water, sewer and cable utilities are also expecting to increase rates, Reed said.
Councilman Francis Lydian said removing the cap was a question of fairness. Someone making $300,000 should pay more tax than someone making $75,000, he said.
BUDGET DISCUSSION. The occupational tax was part of the council’s discussion on the 2011-12 budget, which must be approved by the end of the month.
“There’s no fat in this budget,” Sheckles told the council. “I’m disappointed we can’t give our employees raises.”
The question of funding two additional police officers surfaced with data showing that the city now ranks well among similar cities in police protection.
“We’re adding to an already good police department,” Reed said.
Sheckles said he was putting $125,000 back into the budget he had cut earlier for street repairs. He also restored funding to replace two Jeeps the utility employees use, and an $18,000 software upgrade.
He noted that the budget includes funding for two more police officers, but not cars. He said the city would keep its two best cars when they replace some of their cruisers.
The first full year of revenue from a revised occupational tax would be 2012-13, and Sheckles said that revenue might give the city some financial breathing room. The additional revenue would mean a reduction in the amount of money transferred from the combined utilities account to the general fund.
“It may help us keep our utility rates lower for everyone,” he said. “This will let the general fund fund itself without transfers from the utility fund.”
NEXT FOR THE BUDGET. The next steps for the city’s budget will come at the next council meeting, 7 p.m. Tuesday, June 14th at the city hall annex. The budget will require two readings to for final approval, which must come prior to the beginning of the 2011-12 fiscal year on July 1.
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