Daviess County Fiscal Court voted in approval Thursday to increase the county occupational tax rate and net profits license fee. This tax increase will affect residents and businesses who live outside city limits.
According to county commissioners and County Judge Executive Al Mattingly, this tax increase is the result of less revenue and higher expenses that have taken a toll on the County’s budget.
Moreover, Mattingy said the increase will be used to pay for a number of new expenses that have accumulated over the last couple of years, putting Fiscal Court at a nearly $3 million dollar deficit for the 2019-2020 fiscal year.
“We’re paying a $10 million payroll with the recently added two percent cost of living adjustment (COLA) and a pension system that’s gone up,” Mattingly said. “Our courtroom security officers haven’t had a pay increase from AOC (Administrative Office of the Courts) and it’s very difficult to keep those positions filled. And now we’re faced with needing new voting machines and a radio system for our fire and law enforcement.”
Mattingly said that the other county commissioners and himself weren’t fans of raising taxes, but that the move would be necessary in order to keep Daviess County from receiving a negative credit rating from agencies who assess whether or not the County remains in good financial standing. A negative outlook could prevent individuals and businesses from selecting Daviess County as a place to live or relocate.
“The fuel goes up, and when the wages are increased it puts a strain on the revenue,” Mattingly said. “Not one person up here relishes the idea of increasing taxes — we’re all affected by these increases. But in order for us to do our job properly — for all the citizens of Daviess County to be able to look at the revenue side — I can tell you we scrutinize every expense, we analyze every expense and I think we do a good job of watching over the taxpayers’ dollars.”
Mattingly said the current shortfall experienced by the County could likely be taken care of through its reserves and, in fact, the County has already used some of its reserves to address those shortfalls. However, Mattingly said, the current reserves would only hold the County over for a year, maybe two.
“At that point we would fall below what is normally accepted by our rating agencies and by all the County principles,” Mattingly said.
This tax increase will take place in two parts, beginning in January 2020 when an additional .35 percent increase will be added to the existing .35 percent rate. That will be followed by a .30 percent increase in January 2021, which will set the occupational tax rate at 1 percent.
“In order to address the revenue shortfalls that we discussed in the first reading, it was proposed that we increase the occupational tax in two pieces. Based upon our projections, that increase fills the gap that we have between our revenues and our growing expenses,” said County Treasurer James Hendrix.