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Kenton County Fiscal Court raised the payroll tax rate — and Kenton city mayors have questions


By Patricia A. Scheyer
NKyTribune reporter

Kenton County Fiscal Court met last year on November 8 to pass the second reading of an ordinance raising the payroll tax rate from $.7097 to $.9097. They also passed a similar increase on net profit tax and increased the cap on the payroll tax to 50 percent of the Social Security Max.

County Treasurer Roy Cox explained that there are three parts to the payroll tax, two of which are earmarked for mental health and senior services.

“We didn’t touch those two, or the net profit rate associated with them,,” Cox said. “We only raised the part that was .6 percent, and we raised it to .8 percent. The overall rate increased from $.7097 to $.9097.”

From Kenton County Fiscal Court

Cox presented several pie charts showing what he described as ‘peers’ to Kenton County, other counties such as Boone County, Hamilton county, and Fayette and Jefferson counties, which are metro governments. In the charts, it shows the amount of revenue generated by payroll or occupational taxes, as opposed to the revenue generated by the property taxes. These other counties have their payroll revenue at 66 to 90 percent, whereas Kenton County’s revenue from payroll tax is 35 percent.

“We are putting more of the burden of the tax revenue on the homeowner,” Cox explained. “Through the years, we have had to increase the property tax because of the cap on the payroll tax which has stayed the same since 1978.”

The cap is a limit imposed on the payroll tax, which has been $25,000 since 1978 in Kenton County.

In Boone County, for example, the cap rises every year because it is tied to the Consumer Price Index, or CPI. Their cap this year is $67,179, and they have projected their cap for next year as being $72,906.

Kenton County Judge Executive Kris Knochelmann said he has been trying to adjust the county’s revenue equality for some time. The ordinance amends other ordinances dealing with taxes, and resets the cap to be linked with the social security max. The Social Security max is currently at $160,200, but it also rises each year, and will increase the Kenton County cap along with each raise. This year it can be $80,100, which is comparable to Boone County.

Commissioners were all on board with this change.

“We have reduced our property tax two years in a row,” said Commissioner Beth Sewell. “This will help us continue on that path. I think it will be a fairer taxation across the board.”

Commissioner Joe Nienaber said he has always 100 percent been in favor of a payroll tax.

“You can only tax the rooftops so much,” he said. “We can dilute the tax burden for the greatest amount of people.”

“This could go down as the most consequential thing we will do to fix the long term financial health in the county,” said Judge Knochelmann.

Not everyone was happy about the rate hike.

Erlanger Councilman Tyson Hermes came to the December Fiscal Court meeting to protest, saying the timing of the passage on November 8 was distasteful, considering how many people in Erlanger had to wait in lines to vote and were unaware of the passage of the ordinance.

“I guess I am noticing a trend, and this isn’t the first time you’ve done this,” Hermes said, “Running unopposed, and then essentially thanking the voters with a tax increase. It almost feels like you are hoping that the voters forget about that when it comes time for the next election, but raising taxes right after the election is not something anybody likes.”

Commissioner Draud took exception to his statement, saying the court has always been transparent, and they were not trying to trick anyone.

Hermes also said since the judge commented that this was probably the most consequential act the fiscal court had taken to ensure the fiscal health of the county, he wondered if the county’s fiscal health was in jeopardy. Hermes stated that raising the tax rate almost triple the amount seemed almost obscene.

Peer County Comparison: Percent of Combined Revenue from Major Sources (Kenton County Fiscal Court)

“It is a two-tiered system,” said Hermes. “They raised both rates. It’s a ruse. They won’t say how much revenue they will make. Now they are saying $9 to $10 million. Covington says $11 million. We think it could be $20 to $25 million. This was never a revenue neutral tax. There are so many moving parts to this — I don’t have any confidence in this working.”

Hermes, who was the mayor of Erlanger and is currently on council, is familiar with running a city and understands that companies look at tax rates before they decide to relocate in cities. He said there are 400 companies in Erlanger alone, and there are 19 cities in the county.

He is also a small business owner, and he explained that if more of the employees’ paycheck is going to the county, you almost have to give them a raise to offset the loss of pay.

Hermes was so upset about the rate hike, at the regular Erlanger council meeting on January 2 he was given permission to set up a task force to keep an eye on Kenton County Fiscal court.

Independence Mayor Chris Reinersman spoke about the rate hike at his city’s meeting January 9, saying he was surprised that the cities were not notified ahead of time and agreed that although agendas are posted before the meetings and everyone has a chance to read the agendas and know what is going on, they were all disappointed that they had to find out about the raise after it had been passed. There was no courtesy call.

“I get that they are trying to shift the burden onto the employers, I get that argument,” he said at the meeting. “I think their contention that we’re going to raise this payroll tax rate, and at some point in the future lower the property tax assumes they live in a vacuum, that the increase has no impact on the businesses that come here and stay here.”

Reinersman also said that he was concerned that the county can’t give any numbers of how much this move will increase revenues for the county.

“It sounds like a heck of a lot of money,” he said. “We are working on getting answers.”

He said he didn’t think that comparing Kenton County with other counties is appropriate, noting that Fayette and Jefferson are metro counties, and saying that Boone County only has three certified cities, whereas Kenton County has 19 cities.

Reinersman said that several of the mayors of those 19 cities are very concerned about this, so he had the issue put on the agenda for the mayor’s meeting this Saturday morning in Ft Mitchell.

Covington Mayor Joe Meyer aired his views at his city’s council meeting also.

“This is a conversation we want to have,” said Reinersman.

Occupational License vs. Property Tax Revenue Trend (Kenton County Fiscal Court)


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