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Covington City Commission hears first reading on Fiscal Year 2020 budget, which includes challenges

By Ryan Clark
NKyTribune reporter

City Manager David Johnston has said that in his 20-plus years of serving in local government, each year has produced a budget with some challenges. There are always, he says, certain realities that cities must learn to face.

However, it could be that he’s never faced a challenge like the one coming to Covington next year.

Johnston had the task of presenting the Fiscal Year 2020 budget to city commissioners last week at their caucus meeting, (they heard a first reading of the budget proposal at their regularly scheduled legislative meeting Tuesday night) and while the budget is balanced, Johnston is correct in that it does not come without its trials.

In his presentation, Johnston didn’t mince words. He was clear in what the city would face next year — and the future.

“For the next year we have some challenges we can’t pull any punches on,” he said last week. “We recognize (the challenges) and we use them in crafting the annual budget.”

Among those challenges are:

*The increasing/compounding CERS Employee contributions, which have cost the city $700,000 in the last fiscal year and will cost $820,000 next year.

*The closing of the IRS Processing Center in September, which will result in an annual loss of $500,000.

*Private property reassessments, which resulted in a loss of $160,000 last year and could recur over the next few years.

The budget presented to the commission totals $109,955,000 and is split into two parts: the general fund, which is budgeted for $55,955,000, and the other funds, which come in at $54,000,000.

Johnston also made sure to note that the budget is not recommending a property tax rate hike, and that it is the first time the city will be using a five-year budget model. 

“This takes us away from managing the city like we’re managing a checkbook,” he said, noting it will put more emphasis on looking to the future.

And it is in that future that the city must do some due diligence, Johnston noted. Covington must be proactive on things like preparing: budget reviews, department program assessments, strategic succession planning, capital facilities planning (like for City Hall and the West side fire department), as well as implementing an economic development strategy and finishing the master planning for the IRS site. 

But nothing is going to affect the city the way the pension crisis will.

Last week, Johnston showed the commission a projection of what will occur to the city over the next few years if nothing is changed with the current 12 percent compounding regulation.

By Fiscal Year ’21, Covington would be working on a $728,000 deficit, but contributing $2.4 million to the County Employees Retirement System. The following year would show a $1 million deficit, with the city contributing $3.5 million. By Fiscal Year ’23, the city would have a $1.7 million deficit, but would be contributing $4.6 million to CERS.

“This is a crushing burden on us and our ability to deliver services,” said Mayor Joseph U. Meyer. “It’s simply not sustainable.”

Meyer went on to call for the state to change its setup. He noted how the City of Louisville currently has a $25 million budget deficit because of CERS contributions, which will cause them to raise taxes or cut services. 

“If we don’t get this fixed in the next year or two, Covington will be looking at similar requirements, and that is not acceptable,” Mayor Meyer said last week. “So keep it in mind — we’ve got to get that solved. If we do get it solved, all these other issues we are talking about become much more doable, in terms of treating our people right, investing in our infrastructure, and creating the opportunity for the economic growth that this city is on the verge of experiencing.”

The budget will have a second reading and vote in two weeks.

The next regularly scheduled Covington Commission meeting will be a caucus meeting held at 6 p.m., June 18, at the Covington City Hall at 20 West Pike St.

Contact the Northern Kentucky tribune at news@nkytrib.com

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