Three state lawmakers from Christian County mostly agreed they support giving cities like Hopkinsville more options for local tax revenue as a way to offset the pension burden on the city’s budget.
(Photo by Jennifer P. Brown)
But adopting or amending state law to allow options such as restaurant and alcohol consumption taxes cannot be guaranteed in the General Assembly’s current session, the lawmakers said in a public meeting Monday morning at the Hopkinsville Municipal Center.
State Sen. Whitney Westerfield, R-Crofton, pledged to support the city’s efforts and said he would research why former second-class cities such as Hopkinsville were shut out of those taxing options when the state did away with the city class system several years ago. Smaller communities, such as Cadiz and Oak Grove, for example, are able to levy a restaurant tax.
The city has wanted parity since the class system was abolished, but now the need is more serious, Councilman Wendell Lynch told Westerfield and his House colleagues, Republican Reps. Myron Dossett, Pembroke and Walker Thomas, Hopkinsville.
Lynch chaired a city committee that recently wrapped up eight months of work to project the cost of state-mandated pension contributions for the next 10 years and how the city could weather that hit to the budget.
The meeting with state lawmakers was a final piece in the committee’s work. The council has not yet voted on any of the committee’s recommendations, which include tax increases and cuts to city services that are expected to be unpopular with voters going into this year’s primary and general elections for the 12 city council wards.
Robert Martin, the city’s chief financial officer, outlined the estimated expenses and the options council might face to avoid deficit spending.
“We’re being forced on the local level to impose tax increases,” Martin said.
Based on the city’s estimate of pension contributions through 2028-29, with the assumption of a 2 percent cost-of -living pay increase annually for city employees, Hopkinsville will pay $66.67 million over the next 10 years for its share of the pension, according to Martin’s report.
That estimate assumes no growth in city employment, he added.
The city’s main sources of revenue are the payroll tax, property tax, insurance premium tax and business license tax.
If city council does not approve any increases in those four revenue streams, the city would have the following estimated deficits over the next five years:
- $1.07 million in 2020-21
- $2.12 million in 2021-22
- $3.39 million in 2022-23
- $4.08 million in 2023-24
- $4.85 million in 2024-25
The city’s current reserves of $8 million would not be sufficient to offset those deficit budget. And spending down reserves would eliminate the safety net the city needs to maintain in the event of natural disasters, such as a tornado, or an economic recession, said Martin.
Mayor Carter Hendricks, who is leaving office at the end of the month to become executive director of the South Western Kentucky Economic Development Council, urged local residents to call the message line for the state lawmakers and express support for tax options such as the restaurant and alcohol taxes. The phone number is 800-372-7181.
Jennifer P. Brown is co-founder, publisher and editor of Hoptown Chronicle. You can reach her at editor@hoptownchronicle.org. She spent 30 years as a reporter and editor at the Kentucky New Era. She is a co-chair of the national advisory board to the Institute for Rural Journalism and Community Issues, governing board president for the Kentucky Historical Society, and co-founder of the Kentucky Open Government Coalition.
