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Payroll tax increase does not pass, for now
In March 17 Issue
By Derek Aaron
Times Journal Editor

With the second reading and vote up for the occupational tax raise, the Russell County Fiscal Court split the vote 3-3 Monday night, meaning the amendment to the ordinance did not pass.

Magistrates Larry Holt, Brook Cochran and Greg Popplewell voted against the tax increase while Magistrates Jimmy McQueary, Ronald Johnson and Judge-Executive Gary Robertson voted for it.

The proposed ordinance called for an increase in the county's payroll tax from .25 percent, where it began in 1992, up to one percent with provisions in the ordinance that exempt certain entities that contribute fees such as banks, which pay fees in another manner, Kentucky National Guard members for active duty or training, public service corporations that pay an ad valorem tax on property, among others.

The current rate generates around $440,000 for the general fund while the proposed tax increase would have generated around $1.8 million for the county and was set to begin on April 1.

With the county facing a budget shortfall of $191,000 due to operational costs that include the 911 dispatch, funding to the financially struggling EMS and paying other counties to keep local inmates for several months during the closure of the old Russell County Jail as well as "unforeseen circumstances" on the new detention center, Robertson said he recommended the passage of the ordinance. By law, the county's budget must be balanced by the end of the fiscal year, which ends on June 30.

Around 30 citizens came to the meeting with five of those speaking out, sometimes with much passion, against the hike in occupational tax.

Mike Adams, an employee of Stephens Pipe & Steel, told the court that it was an "easy decision" to vote for the payroll tax increase rather than cut employees or look at other ways of funding.

"Times are tough," Adams said. "We have to make hard decisions, we expect you to make hard decisions."

Robertson told Adams he has made cuts and said around $35,000 was saved by his decision two of his staff not accepting health insurance benefits as well as eliminating the county road foreman position.

"I'm elected to run this county the next four years and I'm going to do what I think is right," Robertson said. "I don't want the state to come in here and take us over … if we don't balance this budget you're going to see them come in here."

Several other citizens spoke to the court, asking the magistrates not to pass the tax hike or implement it only until the county was out of the hole. Some present even told the court the county's citizens needed a better explanation for the tax increase before implementing it.

Terry Stephens, the owner of Stephens Pipe & Steel, told the fiscal court they might find some support to get out of their budgetary hole by sunsetting the tax after the county receives what they have to have.

"I think it is a valid point to question the court and to put down specifically why you need our money," Stephens said, saying that passing this tax increase would bring them under unnecessary scrutiny.

Some of those in attendance said they would accept a smaller increase or support Stephens' ideas of the temporary increase with conditions of the tax being rescinded once the county gets out of its current financial problem.

Rollin McFarland, a vocational school teacher, said he was losing six days of pay due to mandatory state furlough days and that he brings home less money now than he did a decade ago but it takes more for him and his family to live on now.

Like Stephens, McFarland said the court should take only the money they need and decrease the tax rate after that is accomplished.

After more than an hour of discussion among the court and those present First District Magistrate Greg Popplewell moved that the court enact the one percent payroll tax increase with a sunset clause added after a two year period. Following that, County Attorney Kevin Shearer told the court that if they wanted to add that clause to the ordinance, then the wording would have to be included in a new ordinance amendment which would then have its first and second reading as required by law before the matter could be voted on.

Third District Magistrate Ronald Johnson then made the motion for a vote on the proposed amendment.

A roll call vote was taken with Johnson and McQueary voting yes while magistrates Greg Popplewell, Brook Cochran and Larry Holt voted no.

Judge-Executive Gary Robertson, who can vote to make or break a tie, voted in favor of the proposed amendment, resulting in a tie, meaning the measure did not pass.

Following the vote, Robertson asked for a motion to enter into executive session to discuss laying off county employees, effective immediately.

Members of the court met behind closed doors for nearly 15 minutes before returning to say no official action would be taken. Robertson then said he would meet Tuesday with county employees to see if any of them wanted to take a voluntary layoff. As of Tuesday afternoon, the county had laid off nine workers, including Deputy Judge Chris Ramsey, Genita Long from the recycling center as well as the county road crew of Garry Lawless, Danny McBeath, Phillip Chapman, Chris Robinson, Lewis Conner, Bobby Corner and Darren Hadley.

The savings on the nine layoffs will be approximately $50,000 through the end of the fiscal year and it will save approximately $175,000 in a fiscal year.

"Effective (Tuesday) morning I've laid off the deputy county judge, seven employees at the road department and one employee at recycle, which is nine," Robertson said. "If there's a major emergency that happens I advise the public to call their magistrates. The magistrates have a contact number for emergencies only until we get some revenue source that's the way it's going to be. We've only got 40 employees that I'm responsible for and 24 of those are at the jail."

 Robertson said the county would have to find some way to manage this budget shortfall.

"If we don't get this crisis under control some way or another, if we can't borrow some money to get through to July 1, and they aren't going to lend us money if we don't have some source of revenue, then the state will come in here," he said. "If it happens it happens, but I want everyone to know if the state comes in here they're not going to show the public courtesy like we did last night and let them stand up and speak their piece. The state is going to come in here and do whatever's necessary to make it work and they're going to do it in such a manner that they don't have to come back in six months or 12 months. There's nothing in concrete that says they won't up it more than what we're asking, or impose other types of taxes. I just want that to be understood."

Robertson went on to say that lone process are sometimes 45 or 60 days.

"You're still talking about middle of May to middle of June (this would be after a first reading, a 7 to 21 day waiting period before a second reading and passage). The way the money is we'll probably run out by the middle of May, based on projections."

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