Corbin fires shot in impending tax fight

Corbin City Commissioners are one vote away from passing a one percent citywide payroll tax – a move likely to throw the issue of the city-county relationship regarding such taxes back to court.
Commissioners voted unanimously to adopt an “occupational license tax” during their regular monthly meeting Monday. A special called meeting has been set for Thursday at 4:00 p.m. where the issue is the only item on the agenda. City officials say they will almost certainly make the tax a law.
“We’re trying to protect our citizens here in Corbin,” Commissioner Phil Gregory said after Monday’s vote. “If they pay a tax, we want them to pay it to Corbin. We want to put our tax on and collect our tax here in Corbin where we can do something good with the money.”
Corbin workers and business owners already pay similar taxes to Knox and Whitley Counties. The tax takes one percent of each employee’s gross pay and one percent of a business’s net profit. According to Jeff Mando, a Covington-based attorney hired by the city to study the payroll tax issue, citizens in Corbin will pay the tax only to the city, if passed, and will be allowed to credit that payment against the tax imposed by Knox and Whitley Counties. Knox County first passed a payroll tax in 1999. Whitley County magistrates, under pressure from state officials to balance their beleaguered budget, passed a similar tax July 1.
There has been disagreement over whether or not the city’s new tax would stack on top of taxes already imposed by the county governments. Seventy-eight percent of Corbin’s citizens live in Whitley County, and 22 percent reside in Knox County.
Knox County Judge-Executive Raymond Smith said he thinks the law is clear on the issue as it relates to the Knox County side of Corbin … the tax stacks, a view in opposition to Mando’s interpretation of state laws.
“It puts and extra burden on anybody choosing to work on the Knox County side off of the city of Corbin,” Smith said. “I guess if I was an attorney paid to fight the case, I wouldn’t turn it down if they hired me to argue it, but it’s been argued in several instances already.”
Smith points to Knox County’s court battle with the city of Barbourville that finally ended with Barbourville getting to collect 32 percent of all revenue generated from the tax.
Though expressing hope that negotiations with Knox and Whitley County leaders could produce some sort of settlement, Mando said lawsuits over the issue might be inevitable.
“To me, litigation is like surgery … it’s the last option,” he said. “You try to work out your differences to see if you can come to some common ground. That’s what I would hope we could do here. If that doesn’t happen, I would recommend the city of Corbin take steps necessary to protect their residents and their tax dollars.”
Corbin Mayor Amos Miller and officials from neither county have made any attempts at serious negotiations since imposing their taxes. He called passing a citywide tax regrettable, but said it wasn’t without a silver lining.
“We could do a sidewalk program. We could have better recreation. We could use it as an incentive to bring jobs to our city,” Miller said. “There’s so many different things that can come out of this.”
Miller called the issues regarding the tax between the city and counties “complex” and would not say whether lawsuits over the tax were inevitable.
Smith said that if tax money from Corbin citizens were taken away it would cripple Knox County’s budget.
“It would destroy us,” Smith said. “We’ve pulled off some financial budget miracles to balance our budget the way it is. To take those revenues away from us would destroy Knox County.”
Smith said he would vote to remove the county’s occupational tax if that happens.