By MELINDA J. OVERSTREET
for Glasgow News 1
Local officials have learned that legislation may be proposed in the Kentucky General Assembly that would be troubling them as well as others around the commonwealth.
Nick Hurt, the city’s occupational tax administrator, brought up the issue at Tuesday evening’s regular meeting of the Glasgow Common Council Finance Committee. He said he received an email from a representative of the Kentucky Occupational License Association that told him a bill is expected to be introduced in February, pushing for “centralized collection” on all occupational taxes at the state level.
“What that would do, basically, is anything payroll, net profit, insurance – I mean anything that we take in [would] be going to the state level for them to take it in and then them to divvy it out to the cities, counties, whatever, as they see fit,” Hurt said. “The problems I see is, one, you’re not going to have your money available when you need it. Where I go do a daily deposit now, that will not be done. You’re going to be leaning on the state to make sure that they deposit it every day, that they deposit the correct amount, that they collect the correct amount.”
He continued that there would be no personal service whatsoever, as local people would not be handling the transactions but rather people in Frankfort or somewhere else.
Mayor Henry Royse said, “We spent all last week talking about it. There’s nothing that makes sense about it.”
“Nothing,” Hurt said. “It makes no sense.”
The mayor said he had asked Steve Riley, Barren County’s state representative, to explain to him how it makes sense.
“He couldn’t answer me,” Royse said.
Hurt said that last year, there was a push for occupational taxes to be done away with, but that didn’t go through because it didn’t meet enough benchmarks. When Councilman James “Happy” Neal asked why it would be proposed, Hurt said he believes it’s possible that this approach is just another way supporters of the measure would try to use to eliminate occupational taxes, also known as local income taxes.
“We can’t let them get control of it,” committee Chair Terry Bunnell said.
City Finance Officer Madi Griffin said this is the city’s largest revenue stream, and the city might not get as much after the state handles it.
Hurt said this is 55 percent to 60 percent of the city’s revenue.
The expectation – or at least concern – is that the state government would impose a fee to provide this collection service that would then be deducted from the amount the city receives.
“I’d say there’ll be a percentage that’ll come in,” Hurt said.
He said he had received a survey on the issue that significantly focused on online collections, implying that if that’s not being used, that means there is more of a need for centralized collections. He said that his responses to the survey made it known that the city is working toward having that option.
“It just, it’s a bad idea all the way around …,” Hurt said, reiterating some of his previously voiced concerns. “Anytime that we can keep it local, the better off we’re going to be.”
Bunnell said, “Frankfort cannot do a better job collecting these funds than us. Why would we let Frankfort collect it? We have personnel to collect it. We have relationships.”
“An office right here for you to walk into,” added City Treasurer Stephanie Garrett.
“There’s nothing positive about this legislation,” Bunnell said, “and I would be the first to say I’m opposed to it.”
Royse said the Kentucky League of Cities is definitely opposed to it, too.
Hurt said he had no information about who would be sponsoring the legislation, and because it has yet to be introduced, there is no bill number assigned yet.
The committee’s voting and nonvoting members discussed plans to go to Frankfort in February on the day designated as “City Day,” when local city officials go to speak with members of the state legislature to voice any concerns or support for individual pieces of legislation. In the case of centralized collections, they would be in opposition.
“There’s power in numbers,” Royse said.
Garrett said she’s also heard there may be another push this year to change laws that make it impossible for Glasgow and certain other cities to have a restaurant tax, a circumstance many Glasgow officials have bemoaned for several years. In that case, Glasgow officials would be advocating for passage of the legislation.
“We can’t do anything but win on that one,” Royse said.
Bunnell agreed it’s something they should try to get moved forward, as several minutes of discussion ensued on that idea.
Routine reports
Aside from minutes of the prior meeting and confirming when the following meeting is, three other items are typically on every regular-meeting agenda for this committee: an update on the city’s financials, receipts from HdL Companies and an update on the auditing process. This meeting was no different.
Garrett and Griffin provided copies of a spreadsheet to illustrate the status of cash accounts with revenues and expenses only from the current fiscal year, i.e. not reflecting any carryover from the prior year. The fiscal year began July 1, so these figures are reflective of roughly the first half of the year.
This spreadsheet formatting, created through government accounting standards, can make it appear deficits occur when they do not, Garrett said, such as where the transfer of funds from the landfill account to the capital projects account is reflected. The money from that transfer that was spent on a property purchase will later be capitalized, so it will show as an asset on the books at the end of the fiscal year. With that taken into account, Bunnell said, revenues were higher than expenses.
She said she anticipated there could be some confusion with some of the line items and provided some additional spreadsheets with more detail, such as one showing that the landfill’s budget status is where it should be.
Garrett also said that roughly 90 percent of the property taxes owed the city have been collected.
HdL, formerly DataMax, specializes in finding businesses that have done work in Glasgow but, for whatever reason, have not paid for business registrations/licenses, net profit taxes or payroll taxes. The city contracted with HdL in 2021 for its services; HdL’s payment for those services comes in the form of half of the collections it brings in for the first two years. For example, if Company X were identified as owing the city and made its first payment to the city in July 2024, HdL is due half of whatever that particular company pays the city for two years from that time; after that, the city gets to keep all the revenue from Company X.
The city’s December collections from businesses HdL identified totaled $5,264.44, and HdL’s share is $2,632.22. Hurt said most of that amount was from businesses ID’d previously that are now renewing their business licenses or continuing their other payments.
As Hurt puts it, “50 percent of something is better than 100 percent of nothing.”
“This is a very good number for the month of December,” Bunnell said.
Garrett said the audit is still underway, and she has no tentative completion date.
The next regular meeting of the finance committee is at 5:30 p.m. Feb. 18 in the council conference room adjacent to Council Chambers on Floor 2 of the Luska J. Twyman Municipal Building, 126 E. Public Square, Glasgow.
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