Danville City Commission passed into law a pair of tax increases Thursday morning.

The commission voted 3-1 to approve increasing the city’s payroll tax from 1.5 percent to 1.9 percent; and net profits tax from 1.25 percent to 1.75 percent. Payroll taxes are taken out of paychecks from businesses operating in Danville; net profits taxes are taken from businesses’ annual profits.

The payroll tax increase means someone making $30,000 annually would pay $120 more annually, or about $2.31 per week. The net profits tax increase means a business turning a $100,000 profit would pay an additional $500.

The tax increases are projected to bring in around $2.2 million in new revenue in a full year, but the new rates won’t go into effect until the second quarter of the fiscal year, on Oct. 1.

That means “the first year will be a phasing in, if you will, of the increase,” City Manager Ron Scott said.

The city won’t see its first revenues from the increases until mid-February, Scott said.

Boyle County government collects payroll and net profits taxes on behalf of Danville, then distributes that money to the city, Chief Financial Officer Michele Gosser explained. The payroll taxes are collected and distributed quarterly — the county will collect the taxes for October through December in January, then pay them to the city in February, she said.

Net profits taxes are collected annually: The city won’t see those revenues until May or June of next year, Gosser said.

Officials have said the increases will help pay for projects identified as “essential” and “needs, not wants” — replacement of a bridge no longer rated for fire trucks; replacing the crumbling downtown fire station; purchase of a new ladder fire truck in order to maintain the city’s ISO insurance rating; and implementation of energy-savings upgrades, among other things.

Commissioner J.H. Atkins cast the only vote against the tax increases, and also voted against the second reading of the city’s 2017-18 budget, which includes plans for what to do with the new revenues. Like the tax increases, the budget passed second reading 3-1.

“My vote was not a vote against what staff recommended,” Atkins said. “My vote was a vote for doing it incrementally so it would not be a major impact for citizens at the lower end of the point scale.

“I still believe that, but I know these things are very important and need to be done, and I will do everything I can to support you guys.” 

Commissioner Kevin Caudill was unable to attend the special called meeting Thursday morning. Caudill voted with Atkins against the first readings of both items on Monday, but they passed 3-2.

Commissioner Rick Serres, who voted for the first and second readings along with Mayor Mike Perros and Commissioner Denise Terry, said the development and passing of the new budget “has caused a lot of mental fatigue for city staff and the commissioners up here.”

Coming up with a budget that “looks to the future” and attempts to fix problems the city has had for a long time, but doing it in an economical way, was tough work, Serres said.

“Having said that, there are some exciting things happening in Danville,” Serres said. “We’re seeing a lot of growth currently and we don’t want to stop that momentum.”