County commissioners discuss tax increase, budget deficit

May 17, 2019 | 3:30 am

Updated May 19, 2019 | 3:45 pm

Daviess County Fiscal Court discussed a first reading for an ordinance related to increasing the occupational and net profit license fees for residents living outside city limits at Thursday’s Fiscal Court meeting.

Daviess County Fiscal Court discussed a first reading for an ordinance related to increasing the occupational and net profit license fees for residents living outside city limits at Thursday’s Fiscal Court meeting. The decision to raise the occupational tax wasn’t an easy one, commissioners said, but was deemed necessary due to a $2.2 million deficit Fiscal Court is facing in their 2019-2020 budget.

The County has enough in the bank to cover the deficit, but Daviess County Treasurer James Hendrix said the County’s credit rating could be in danger if they dip too far into their reserves.

“The revenues have not kept up with the expenses,” Hendrix said. “There’s at least $1.5 million we don’t have the funds for. We can’t go too far into the reserves because it will negatively affect our bond rating.”

Daviess County Judge-Executive Al Mattingly said the tax increase will take place in two parts — the first occurring on Jan. 1, 2020, where the tax increase will be raised from 35 cents to 70 cents. That increase should generate an additional $2 million, Mattingly said.

The second increase will take place on Jan. 1, 2021, and will raise the occupational tax from 70 cents to $1, which would generate an additional $1.5 million in revenue.

“It won’t pay for it all, but it’ll return the ability to Fiscal Court to pay for expenses, as was done for the last eight years,” Mattingly said.

Mattingly said none of the commissioners want to raise taxes but, after careful consideration and a deep look at the County’s budget, it was decided there was no other way to move forward.

“No one on this bench likes to increase taxes — that’s why we haven’t done it for eight years,” Mattingly said. “The Constitution says we have to provide animal control, law enforcement. We don’t necessarily like [raising taxes], but that money is going to come from somewhere.”

The biggest deficit Fiscal Court is facing comes from a pension system the county adopted two years ago, costing Fiscal Court $1.5 million a year on a year-to-year basis. Another $1.9 million was transferred to the Daviess County Detention Center this year, Hendrix said. Even more, a $2.5 million subsidy was paid to the Daviess County Sheriff’s Office, and an additional $250,000 was paid in health insurance costs.

“Every one of these are constitutional responsibilities we have,” Mattingly said.

Fiscal Court would fall below $6 million in reserves if they didn’t act now in implementing a tax increase as a means of revenue, according to Mattingly. Outside companies would begin penalizing Fiscal Court’s bond rating if those reserves were to fall below $7 million.

“I looked over this budget every way I knew how — I just want to make the people understand that,” said County Commissioner George Wathen. “I want to reiterate that we haven’t raised taxes in eight years. We did a four-year forecast, and each year the shortfall just gets progressively worse.”

Wathen said raising taxes was the lesser of two evils — the other evil being cutting costs to the various programs Fiscal Court supports.

Mattingly said Daviess County’s occupational tax rate was lower than every surrounding county’s tax rate, except for Hancock County. According to the state government’s website, Daviess County (.35 percent) currently has the lowest occupational tax rate out of the four highest populated counties, including Louisville Metro (2.2 percent), Lafayette/Lexington (2.25 percent), Warren/Bowling Green (1 percent), as well as Ohio County (1 percent), Hardin County/Elizabethtown (1.35 percent) and several others.

May 17, 2019 | 3:30 am

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