Most impactful stories of 2019: Perfect storm pushes Boyle County to pivotal decision on taxes
Published 9:39 am Tuesday, December 31, 2019
Editor’s note: This is the fifth of five stories chosen by The Advocate-Messenger’s staff as the most impactful of 2019.
The Boyle County Fiscal Court’s decision late this year to increase the county’s payroll and net profits taxes hasn’t taken effect yet, but when it does, it will impact all of the more than 14,000 people who work here.
There are few if any stories from 2019 that will have such a widespread and lasting effect. And the factors that led to the decision to raise taxes were making headlines all year, as well.
Kentucky’s pension crisis played a big role, as did the need for a new — or less likely, a renovated — jail.
Kentucky law pushed fast forward on the whole process, because Boyle County will permanently lose the ability to raise its payroll taxes — its biggest source of tax revenue — on Jan. 1.
Because of a statute that critics have decried as “archaic” and “arbitrary,” Boyle magistrates had to decide now, not later, whether or not to raise taxes.
That element of unexpected drama on top of everything else helped land what was definitely one of the most important stories of 2019 firmly within the top five as chosen by The Advocate-Messenger.
Here are some newsworthy moments from throughout 2019 that ultimately played into the vote to increase taxes:
Jan. 17: Legislators discuss population cap
A possible payroll tax cap was one of the topics discussed during a public meeting with state Sen. Rick Girdler (R-Somerset) and state Rep. Daniel Elliott (R-Danville) Wednesday morning at Danville City Hall. Mayor Mike Perros hosted the event.
The possibility of Boyle County bumping into an occupational tax cap came up several times. Since Boyle County’s population is predicted to top 30,000 in the 2020 Census, an old law that only affects counties with 30,000 or more people has the potential to essentially cap Boyle County’s payroll tax revenue from Danville residents — or even zero it out entirely.
That law allows for payroll taxes paid to a city to be credited against the payroll taxes owed to a county government.
Elliott told the crowd he realizes the financial harm the old law would have on Boyle County. He said he has drafted legislation to “deal with the population issue,” but has yet to file it. He said the question will be how to handle the situation — whether to increase the population requirement or repeal the law completely.
Girdler said he doesn’t think the issue is “on the radar” for many legislators because it doesn’t affect their counties. Therefore, it’s important for Boyle County officials to testify in Frankfort about how the “archaic” law should be altered. “They have to hear personally from you all,” Girdler said.
Jody Lassiter, president and CEO of the economic development group Develop Danville, said if nothing is done about the population limit and occupational taxes collected by the city and county, it would “gut Boyle County’s budget.” He suggested there needs to be some sort of revenue sharing agreement in place between the county and city and asked that Girdler and Elliott jump on changing the legislation.
“It’s going to gore someone’s ox down the road,” Lassiter told the legislators, so it would be best if they found a way to deal with occupational tax legislation that didn’t hinge on population levels.
May 4: Pension liabilities in the millions
Kentucky Auditor of Public Accounts Mike Harmon released an audit Thursday that states the estimated pension liabilities for every state, county and other organizations in the state “under the KRS retirement umbrella.”
The combined pension liabilities of all KRS employers in the county is almost $54.4 million, according to the audit. About $35.5 million of that is for non-hazardous-duty pensions; and almost $18.9 million is for hazardous pensions for people like police officers.
Boyle County Fiscal Court has a total liability of almost $14.74 million — more than $7.65 million for non-hazardous-duty and almost $7.1 million for hazardous-duty.
July 5: Tours show public problems with jail
Members of the public are getting an uncommon chance to see inside Boyle County’s jail, thanks to a series of jail tours for the public hosted by jail staff and members of Boyle County Fiscal Court.
The first such tour was given for around half a dozen local residents and Magistrate Jamey Gay on Monday.
“This jail has been here 21 years,” said Captain Danny Sallee, one of the group’s tour guides through the aging structure. “It’s seen better days.”
Sallee and Lt. Michael Clem led the group through the jail’s state side, where it houses what Sallee said is one of the most successful substance abuse programs in the state. They took them to see the jail’s indoor and outdoor recreation areas and explained how the indoor area was turned into a housing space for inmates back a couple years ago, when the jail’s population was more than 100 inmates more than it is today.
They showed them uneven and warped floors, leaking ceilings and the jail’s GED classroom and staff break room — both of which are repurposed halves of old visitation rooms.
They took them by a former closet that is now used for attorney visits and explained how the jail’s poor design creates all kinds of problems today. There are 90-degree corners and doors with space behind them almost everywhere you look, Sallee pointed out while stepping through a door and into a corner, disappearing from sight of the group even though he was only a couple feet away.
Sallee said it wasn’t a good idea when the jail was built in 1998 to make it part of a complex that also houses the Boyle County Road Department and EMS. He also said he thinks the design flaws reveal the county just went with the lowest bidder without thinking enough about how long it would need the facility to last.
Clem said given all the things that go on in the jail, he certainly never has a boring day at work.
“It’s always something new every day,” he said. “About the time you think you’ve got everything done, something else happens.”
Gay said the jail tours are important because the county has “a huge decision” to make. Magistrates are in the process of pursuing either an entirely new jail or a floor-to-ceiling renovation of the existing one. Both options were estimated to cost more than $30 million by a jail study completed last year; the renovation was estimated to be more expensive than building new.
“We want to get the feedback from our constituents and let them see the jail first hand, and see what we’re up against,” Gay said. “It’s a big-ticket item but it’s something we are constitutionally required to do as a county, so we’ve got to find a way to make it work.”
Aug. 6: Editorial slams state over pensions
The Kentucky Legislature met in a special session this summer to give a little relief to government agencies such as public health departments, faced with skyrocketing pension costs that could force a substantial number of them to dramatically scale back services or even close.
The special legislation may have saved some health departments for now, which means vital services for their communities will continue. But it did not solve the bigger problem: Someone has to pay to fix Kentucky’s pensions. Legislators delayed some of that expense last month, but skipping a payment never makes a debt disappear.
… The reality is someone has got to pay. Right now, local governments and quasi-government agencies are being left with a huge chunk of the bill. Legislators may have provided short-term relief this summer, but it would be a mistake not to hold them responsible if your local health department, or fiscal court or board of education has to raise taxes to pay for their pensions.
By opting against other kinds of action, legislators have chosen this path for paying off our pensions — the path that goes through local governments’ general funds.
Aug. 9: Jail committee hears design firm proposals
The Boyle-Mercer Joint Jail Committee heard from two design firms pitching for the job of designing a new Boyle County Detention Center. Brandstetter Carroll and DLZ, both firms out of Lexington, presented design ideas via slideshows to those gathered for the Friday meeting in Harrodsburg.
Each firm was given an hour to make their pitch, which included design ideas; no cost information was discussed. Jailer Brian Wofford said architects should be submitting their cost for the projects by the end of the month.
Brandstetter Carroll pointed out that the population is much lower than when they first stepped in to create the design — the jail had been at around 400 inmates when they began, and is currently at 270. The firm supplied the jail study previously, which detailed the overpopulated conditions of the jail, as well as the condition of the building itself.
Representatives with the firm said they may need to go back and reanalyze, since their design is for 400-plus beds.
Monday, Wofford said, “At the rate we’re going, we’ll be back up to 400. I don’t think we need to do anything smaller than 350 beds.”
The companies brought all members of their teams with them who would be heading up the projects, such as structural engineers, jail planners and those specializing in secure treatment facilities.
Many said that unfortunately, the county jail systems are becoming the “new state hospitals,” due to how many have mental health issues, which was heavily considered during the design mock-up. Correctional healthcare best practices — affecting medical and mental health; geriatric and hospice care; and ADA requirements were all taken into account.
After the meeting, Wofford said there weren’t huge differences between the two firms’ design ideas. “I’m sure the cost will play a big part in who we select,” he said.
Aug. 27: Report shows payroll tax growth
Businesses in Boyle County are generally making more profit and paying workers more than they were a year ago, according to a report from Boyle County Assistant Treasurer Laurent Nash.
Boyle County workers paid more than $1.5 million more in payroll taxes during fiscal year 2019 than they did in fiscal year 2018, according to Nash’s report. And businesses paid more than $600,000 more in net profits taxes.
Some of that increase may be attributable to increases in the City of Danville’s payroll and net profits taxes that went into effect partway through fiscal year 2018. But Nash’s data, which includes Danville’s and Boyle County’s taxes, also breaks down what was paid just to the county, which has not raised payroll or net profits taxes recently. Those county-only figures still show a 4.17-percent increase in payroll tax revenue and a 20.68-percent increase in net profits tax revenue — percentages that correlate to overall wages and business profitability.
Boyle County Magistrate John Caywood said he hopes the data will help leaders identify trends early on and react in ways to prevent loss of business or take advantage of a positive trend.
“I think we have to move as fast as we possibly can … and I think that this information will help in this effort,” Caywood said.
The breakdown shows the medical industry generates the most payroll tax revenue — $3.254 million in fiscal year 2018 and $3.671 million in fiscal year 2019. Manufacturing businesses generate the most net profits taxes — about $479,000 and about $750,000 in the two years, respectively.
Sept. 10: Committee will discuss payroll tax increase
Could a payroll tax increase be on the horizon for Boyle County? According to recent comments by county officials, it’s at least something they plan to discuss.
Two factors appear to be pushing magistrates toward a discussion of an increase:
- mounting expenses for county government, including the looming possibility of a new jail that could cost more than $30 million to build; and
- the strong likelihood that Boyle County could lose the ability to raise its payroll tax rate after the 2020 Census is certified.
“I hear some of us say we need more revenue to help solve some of the issues that we have,” Magistrate John Caywood said Tuesday. “But what I’m not hearing is where that’s being discussed and where that’s going to start.”
Caywood suggested the county’s Finance Committee should begin meeting more frequently and/or conducting a serious discussion of the county’s best options for increasing revenue.
Judge-Executive Howard Hunt said he agreed with Caywood’s idea.
“I would like that to at least be a part of the discussion of increased revenue stream development,” Hunt said. “It’s a good place to start but it will have to take a much broader picture than that.”
Magistrate Jason Cullen said county officials should also be looking for cost savings, not just possible tax increases. He pointed to the county’s recent move to switch health insurance brokers, which he said is slightly more expensive on the front end but “on the back end, we’re going to save a lot of money.”
“I think if we can look at opportunities like that outside of just the obvious raising taxes, but if we can look for ways to cut and still provide a good service — those are opportunities,” Cullen said.
Oct. 16: Editorial calls for end to ‘population penalty’
It’s time to end Kentucky’s backward population penalty on small but growing communities.
The Bluegrass State has a weird, unjustified rule on the books that makes life complicated for counties if they have a population of less than 30,000, but eventually grow to have more than 30,000 people.
Counties have control over their own payroll taxes — as long as they stay south of 30,000 people. Once they hit that arbitrary population threshold, their ability to increase payroll taxes almost goes away.
… What does that mean today? Boyle County officials, faced with mounting costs from every side and the prospect of needing $30 million or more for a new jail, are being incentivized to consider a payroll tax now, before the 2020 Census can cut off that revenue-generating avenue.
Boyle County could increase payroll taxes now based on educated guesses about the future, which could turn out to be wrong. They could feasibly increase the tax more and sooner than is necessary.
And here’s another effect of the population penalty: Affected counties are less likely to ever lower their payroll taxes in the future out of fear they could never get those revenues back.
The bottom line is this: The population penalty is an archaic non-sequitur that doesn’t belong in Kentucky’s statutes.
At best, it’s a vague attempt by state government to constrain taxes imposed by local government. But it gets in its own way and eliminates tax flexibility for local governments without any wiggle room.
And don’t forget there are already far more effective methods for constraining local taxes in place: They’re called elections.
Oct. 17: Letter from former magistrate warns ’no choice’ on tax increase
I’m glad to see your editorial on the census issue. You are exactly right, the law concerning population over 30,000 needs to be repealed asap.
There is no doubt Boyle will go over 30,000 population when the census is completed in 2020. What makes it almost a certainty, is another very questionable law within the census rules that most are not aware of.
According to conversations with the head of that department I had while I was magistrate: They must count everyone who lays their head down in Boyle County when they take the census, hospitals, homeless and anyone in our jail or Northpoint Training Center. The most significant is Northpoint.
If you recall during the last census in 2010, they had a riot and buildings were burned down, consequently they had to move over 3,000 inmates out to other prisons. Then the census was taken, after they were moved, reducing the population by over 3,000, all of those being in District 4, which was my district. Consequently due to that, an area had to be moved from one district to District 4 to keep the population levels as close to even as possible in each of our districts..
Now this sets the stage for what WILL happen in 2020. Those 3,000 have been moved back to Northpoint. Those 3,000 inmates will take the count in Boyle County over 30,000. Consequently the Boyle County Fiscal Court will have no choice but to consider a tax increase.
Oct. 18: Jail design firm chosen
The Boyle-Mercer Joint Jail Committee has selected the architectural and engineering firm it wants to use to build a new jail or renovate the existing one.
Brandstetter Carroll, the same firm the counties used for a $75,000 criminal justice system study last year, was recommended by a unanimous vote on Friday. The Joint Jail Committee’s recommendation will now go to both counties’ fiscal courts for possible approval.
Brandstetter was competing with one other company, DLZ, for the job. The costs for either firm were comparable, Boyle County Treasurer Mary Conley has said previously. The actual cost will be based on percentages of what Boyle and Mercer ultimately decide to spend on a new or renovated jail.
“I think both companies represented themselves very well,” Boyle County Judge-Executive Howard Hunt, a member of the Joint Jail Committee, said. “… There’s no doubt, in my personal opinion, that each of them could do a good job.”
Nov. 12: First reading of payroll tax increase
Boyle County is one step away from increasing its payroll and net profits taxes at the beginning of 2020.
Magistrates voted 5-1 Tuesday to approve first reading of an ordinance that would increase the county’s payroll tax and net profits tax from .75% to 1.25%.
Officials said the increase, which was recommended by the county’s finance committee, is necessary because of upcoming big-ticket expenses and a state law that will effectively bar Boyle County from ever increasing its payroll tax again after Jan. 1, 2020.
The half-percent increases are expected to generate an additional $2.75 million in payroll taxes and $450,000 in net profits taxes annually, according to Boyle County Treasurer Mary Conley.
Under the current rate, someone making a $30,000 salary pays $225 out of their paychecks to Boyle County every year; and a business that makes $100,000 in profit pays Boyle County $750.
Under the proposed increase, the same worker would pay $375 (an increase of $150); and the same business would pay $1,250 (an increase of $500).
“This is not a day that any of us like or want to be at. In some ways, our hand is forced,” said Magistrate Jamey Gay, a member of the finance committee who presented the proposed tax increase to the fiscal court Tuesday. “For the long-term financial health of our county, this is something we’re going to have to do moving forward.”
Officials had said previously Boyle wouldn’t officially hit that 30,000 mark until the 2020 Census is certified, which would happen in 2021. But Gay said Tuesday the county has obtained a legal opinion that when the Census is certified, it would be retroactive to Jan. 1, 2020. That means Boyle County has less than two months before it loses the ability to increase its payroll tax rate, possibly forever.
“I don’t think there is a single member of this court whatsoever that wants to do what we are undertaking as a potential today,” Judge-Executive Howard Hunt said. “But if we are good caretakers of the public trust, then this is something we have to pay attention to.”
According to budget numbers from Treasurer Mary Conley, Boyle County’s .75% payroll tax brought in just over $4.25 million in fiscal year 2019; the county’s .75% net profits tax brought in just under $700,000.
If the tax increases pass, they wouldn’t have much impact on the current fiscal year; the county might collect three months worth of the new taxes before the next fiscal year arrives, Conley said.
A projection from Conley shows Boyle’s payroll and net profits tax revenues jumping from about $7.33 million this fiscal year (budgeted) to $10.55 million in fiscal year 2021 (projected).
The City of Danville also has payroll and net profits taxes, set at 1.9% and 1.75% respectively. Combined with Boyle County’s proposed increases, workers in Danville’s city limits would pay a total of 3.15% of their paychecks to local taxes; and businesses would pay a total of 3% on their profits.
Nov. 15: Judge-exec candidate backs court’s decision
… The magistrates who voted to increase the county’s payroll tax rate are to be commended, not condemned, for making the hard yet appropriate decision for the long-term benefit of Boyle County. Judge Howard Hunt also deserves public thanks for making a statement in support of the court’s action when he easily could have remained quiet.
This was a difficult decision. I know. When I ran for county judge-executive last year, I had this very discussion with a number of supporters about the inevitability of the tax vote. Therein lies an example of the consequences we face because of actions in Frankfort.
The 2020 Census is coming. That is irrefutable. And when the count is complete, Boyle County’s population will likely exceed 30,000. That’s the magic yet arbitrary number that legislators set that greatly restricts a county’s independent ability to raise payroll taxes — revenue that will be sorely needed to meet financial obligations for road and bridge maintenance, the jail, EMS, constituent services, and the mounting local contributions necessary for the pension promise to county employees — another example of legislative inaction in Frankfort.
The bottom line is that the vote had to happen now. Had I won the election last year, I would have been fully prepared to cast a tie-breaking vote to approve the tax if it came down to that. The long-term cost of inaction would have been far too great.
No one likes to pay higher taxes, and no elected official likes to make a vote to impose them. But we have to look beyond the current budget to the mounting cost of services for the county’s residents. The court exercised proper due diligence and, in my opinion, made the right vote. Judge Hunt and members of the court are leading the county — often a thankless position. But to them all, I say, “Thank you.”
Nov. 30: Magistrate says reporting has been ‘unfair’
Boyle County Magistrate Jason Cullen alleged Tuesday that reporting on the county’s plan to increase its payroll and net profits taxes had been “a little unfair.”
Cullen said The Advocate-Messenger did not include in its story about the first reading of the tax increases one specific fact: “Boyle County has not increased its occupational tax in 15 years.” Magistrates brought that up a lot before moving ahead with the increases, but it wasn’t in the newspaper’s story, he said.
“If I missed that part in the story, I apologize, but I think it was kind of a little misrepresenting because I know this court has tried really hard not to increase taxes, and it did it for 15 years,” Cullen said. “So it needs to be known that this was not something done on a whim. And I would just like to make sure that when stuff is getting reported, it’s reported accurately and fairly.”
… Also during Tuesday’s fiscal court meeting, Magistrate John Caywood said he, Conley and Magistrate Tom Ellis met with local industry leaders on Monday to explain to them the need for an increase in taxes.
“I got two things out of it. One of them was they appreciated the fact that we came and did it,” Caywood said. “This is strange and debatable — I also sense that they kind of gave me the message that we’d rather have it done more often in little snippets rather than a larger one over a long period of time. That is just what I felt.”
Dec. 6: Plant manager says industry opposed
An industry leader in Boyle County says a recent meeting between members of the local industrial council and county officials about a proposed payroll tax increase didn’t go quite the way a magistrate depicted it.
“I’m not sure the point was taken by the magistrates,” said Ty Staples, plant manager for the Berry Plastics Corporation, which has a facility on Lebanon Road in Danville.
Staples said the industrial council asked for the Nov. 25 meeting with county government officials because its members are opposed to the payroll tax increase.
“The meeting was requested because none of the manufacturing plants are in agreement with this tax,” Staples said. “We are the ones that are going to have to explain to our employees come January why their taxes went up (66%).”
Staples said this week that when he read Magistrate John Caywood’s characterization of the meeting, “it sort of bothered me because I’m sitting here thinking, ‘They’re railroading this through,'” he said.
Staples said everybody at the meeting was “unpleased” with proposed increase. He believes it will make Boyle County less competitive in attracting employees — something that’s already difficult today.
Staples said he knows the county is afraid it could get sued for violating inmates’ constitutional rights if it doesn’t build a new jail.
“I think we understand that there needs to be work done on the jail, but a (66%) increase is tough,” he said. “… I don’t think people are understanding what’s coming. … The magistrate (made it sound like) everyone was in support of it but we actually requested the meeting because we are not in support of the raise.”
Staples said he would like to see a smaller increase; he would also like to see the state of Kentucky make it legal to implement “special sales taxes,” like other states have. Such taxes can be approved for a limited duration by voters, in order to fund large capital projects like a new jail, he said. But currently, that’s not an option in the commonwealth.
Dec. 9: Tax increase passes
Boyle County magistrates voted 5-1 Monday to enact half-percent increases to the county’s payroll and net profits taxes. The increases go into effect Jan. 1.
Those who voted for the increases were adamant before the vote that no one wanted to raise the taxes. But the combination of upcoming big-ticket expenses and a Dec. 31 end to the county’s ability to ever raise the tax rates again put them between a rock and a hard place, they said.
The one magistrate opposed, Jason Cullen, said officials should have looked harder at cutting expenses instead, and he challenged his fellow magistrates to reduce the tax increases in the future if cuts can be made.
Magistrate Jamey Gay made the motion to pass a second reading of the increases, based on the work and recommendation of the Finance Committee, which he sits on with Cullen.
“One of the things that has been brought up and one of the things that the committee looked at very seriously and took great consideration of is the impact that this could have on future growth and economic development,” Gay said. “… It really comes down to the fact that we’ve got to really think about what’s in the best long-term interest of the county’s financial situation, and this is no way has been an easy process or an easy decision. It’s something I’ve had many sleepless nights over.”
Magistrate Phil Sammons seconded Gay’s motion.
“This is breaking my heart to have to vote like we’re going to vote in a minute,” Sammons said. “But when … the Census comes out, this is the last time that we’ll ever be able to do this.”