County, cities agree on payroll tax split

It’s a deal!
A three-way occupational tax-sharing agreement received approval from officials in Whitley County’s two cities and its fiscal court this week, capping months of wrangling over how money from the tax would be split. All that remains is a second procedural vote by all three parties to set the agreement in stone next week.
Williamsburg became the first Monday to accept the deal during a meeting of the city’s city council.
Williamsburg Mayor Roddy Harrison said estimates vary, but that the split will mean roughly $400,000 and $700,000 in additional income annually for his city.
Magistrates from the county’s fiscal court agreed to the deal Tuesday morning and Corbin’s City Commission voted to accept the compromise Tuesday evening.
“I think it is equitable and something we can live with,” Whitley County Judge-Executive Mike Patrick said. “If we are successful with collections during this first quarter, the outlook for this fiscal year is good. The next year it will be a little less, but we hope to land new jobs so that can be overcome.”
The deal would allow Whitley County to keep all occupational tax revenues from July through September of this year (one quarter), then each of the cities would get 75 percent of all tax revenues collected from inside their limits for the remainder of the term of the deal. The remaining 25 percent would go to the county.
The deal is in effect for three years and has an “opt out” provision whereby any of the parties can get out of the deal as long as they give the others a written notice 180 days in advance.
“I think this is going to be a beneficial thing for all three entities. I am pleased,” Harrison said. “The county gets a nice lump sum during the first quarter so the county can come out of its situation, then we do the 75-25 split. This is a rate settled on by all three entities, and I think all three are happy.”
Corbin Mayor Amos Miller called the deal “fair,” but said he would reserve further comment until it is finalized next Tuesday when the City’s Commission meets again for a final vote.
“The city of Corbin is in Whitley County,” Miller. “I think it gives Corbin its fair share of revenue.”
County leaders initially had hoped to keep 50 percent of the tax revenues coming out of Corbin and Williamsburg. Despite the lesser split, Magistrate Wayne Wilson was the only person to vote against the proposal.
Initial plans for Williamsburg’s tax revenue are some over due pay raises for city employees and improving infrastructure. Harrison cautioned that the raises would be for city workers, and not the mayor or city council members.
“There are a lot of people here that deserve more, but we have never really had an opportunity to do that,” Harrison said. “We can’t automatically do it during the first quarter. It may be a while. I’m not saying everyone will get a raise in two weeks. It may take us a while, but we will have some money to do some substantial raises.”
Harrison added that he would like to use part of the money to pave city streets, fix sidewalks, and other beautification projects that most cities normally have to wait until they get grant money to do.
Some funds may also be earmarked for industrial recruitment projects, Harrison said.
Both cities and the county will share the cost of collecting the tax. Corbin Mayor Amos Miller said the parties only agreed to pay “actual” costs and would not follow budget mandates formulated earlier by county leaders giving the newly formed occupation tax office about $130,000 a year with which to operate – including a controversial $24,000 to purchase a vehicle for the office.
Projections used during negotiations show the total amount of tax money that would be collected to be about $2.97 million annually. Roughly $899,000 would go to the city of Corbin and Williamsburg will get around $797,000. The county would be left with $1.13 million.
Corbin, Williamsburg and Whitley County will be paid tax revenues from an escrow account each quarter. Officials say the account will be audited periodically to prevent any irregularities.
The tax takes one percent of each employee’s gross pay and one percent of a business’s net profit. In an effort to shore up their beleaguered budget, Whitley County magistrates first passed a one percent occupational tax June 30. Corbin and Williamsburg soon followed.
The agreement avoids what could have been a lengthy court battle over the issue.
Lingering for Corbin is still an unresolved fight with Knox County over occupational tax revenues in that county. About 22 percent of Corbin’s residents live in Knox County. City officials say state law entitles them to collect revenue from within the city limits and residents can credit that against the county tax. Knox County officials contend Corbin missed any chance to collect occupational tax revenues because Kentucky courts have already ruled on the issue.
Knox County passed an occupational tax in 1999 and was forced, after a nasty court battle, to share revenues with the city of Barbourville. Barbourville currently gets 32 percent of all tax revenue collected in the county.
“We want to give them the same opportunity Whitley County had,” Miller said. “The same agreement we signed here today, we would sign with Knox County.”
“As soon as this is final, we will deal with Knox County.”