The Jenkins City Council on Tuesday night narrowly approved an ordinance creating a 1-1/2 percent occupation tax for people working inside city limits.
Council members Rebecca Terrill Amburgey, Robert Adams, and Chuck Anderson voted in favor of the ordinance. Carol Anne Litts and Terry Braddock voted no. Councilman Rick Damron could not attend because of other commitments.
The tax as described in the ordinance will apply only to full-time workers in the city at every business entity and will assess a 1-1/2 percent tax on wages that are subject to taxation by the Internal Revenue Service and Kentucky Revenue Cabinet. The tax will not apply to serving National Guard Members, precinct workers in elections, public service corporations, retirement pensions, unemployment compensation, death benefits, workman’s compensation and disability benefits, expense reimbursement, student payments, gratuities (tips), and live performances. City Attorney Randall Tackett, who read the ordinance, said there are several other categories and the state recently passed a bill to set a standard for municipal taxes, but the actual forms have not been finalized.
Mayor G.C. Kincer praised the members who voted in favor of the ordinance, saying they had voted to move the city forward and away from being seen as a retirement community and toward a future that would be geared toward young people and a more vital and economically sound future. He said the ordinance would make it possible to fund improvements in the city’s infrastructure and to implement a five-year strategy that will focus on a healthier and more active city and will include a lake walk, a system or trails for hiking and all-terrain vehicles, and a swimming pool and recreational complex to focus on wellness. The council also read and voted to approve several resolutions pertaining to funding for several water projects.
“This is a huge step for the city into the future,” said Kincer. “I promise it will be positive. It will enable the city to move forward with the strategic plan and it will help you make the city a better and healthier city.”
Kincer also praised the council for adopting a new general plan for taxing the city at a work session, which was held on Monday evening. The session was originally planned to discuss the occupational tax ordinance but led to a lengthy discussion about the city’s taxation policy. The council emerged with a general consensus that the occupational tax should be enacted, but as part of an overall program of tax reform that will include the gradual lowering of property taxes in the city and the enactment of a restaurant tax as well.
After discussing the number of valid signatures on a petition collected by Burdine resident Betsy Addington opposing the occupational tax, the council broadened its discussion after Councilman Chuck Anderson suggested the council look at tax reform by lowering the city’s property tax which he said is the 18th highest in the state. Anderson said that tax, combined with taxes on real property levied by the Jenkins Independent Schools, which Mayor G.C. Kincer said are the seventh highest in Kentucky, make Jenkins seem unfriendly to business and residential expansion.
After discussing several possible ways to offset a reduction in property taxes, which Kincer said account for about $150,000 yearly for the city’s coiffures, the council settled on a system of taxation with a 1 ½- percent occupational tax, a 3-percent tax on prepared food in the city as well as a 3-percent tax on cart rental and tee fees at Raven Rock Golf Course, a hotel tax, an increase in taxes on abandoned property, which will expedite the city’s efforts to seize and clean up blighted and deteriorated property, and a gradual reduction of property taxes.
Anderson suggested the initial reduction in property taxes go from $.4499 per $100 real property to $.35 per $100, eventually culminating in a property tax rate in the $.25 to $.30 per $100 range. Anderson said he believes the city will realize a net profit by lowering the property tax because it will make it much more attractive to businesses and to residential expansion alike.
“I feel the city has to be business and residential friendly,” said Anderson. “We should lower our property taxes because people won’t move here (because of the high tax rates). Lowering the property tax will be a pinch in the beginning, but it will draw business.”
The idea of a drastic cut in property taxes initially was discussed but shot down as too much too soon. Councilman Robert Adams said he was not adverse to cutting the property rate, but cautioned against drastic action saying it would take too much if it was cut suddenly by 50 percent. Rebecca Terrill-Amburgey agreed, saying it would be more workable to do incremental cuts on the property tax each year.
The council was generally enthusiastic about enacting a 3-percent restaurant tax as well. Kentucky law specifies that taxes on restaurants and hotels must be used for enhancing tourism and the council agreed that the tax could be used to help turn the city’s proposed swimming pool and water park into tourist attractions. The council members also mentioned the cost to the city of picking up litter that is largely generated by fast food restaurants.
Several council members mentioned the school tax and all agreed that while it is high, the city needs the school and deeply identifies with it. However, several members asked why people who oppose city-proposed taxation haven’t gone to school board meetings to discuss the school system’s taxation policy. Mayor Kincer said the school system usually takes the state’s “compensating” tax rate, which is the highest tax rate it can impose annually without holding a public meeting for the purpose of discussing the tax increase.
City Attorney Randall Tackett told the council that Anderson’s thinking represents an evolution in taxation strategy that is taking place in municipalities throughout the nation, moving from a property- or ownership-based way of taxing toward a consumptionbased taxation policy. He said there are no taxes that are fair to everybody who pay them. City Administrator Todd DePriest added that about every progressive city in Kentucky now has an occupational tax.
“What Chuck is proposing is a shift away from ownership tax to consumption tax,” said Tackett. “The city has so many retirees it cannot survive on ownership tax. It’s a philosophical jump. Other cities have come to this same realization. Most city’s tax bases are based by about one half on the occupational tax.”
Councilman Rick Damron also told the council that Jenkins Independent Schools Board Chairman Durward Narramore told him if the city does impose an occupational tax, he will recommend moving the Central Office to McRoberts. However, when contacted later by The Mountain Eagle, Narramore said the remark had been made in jest. Narramore said he understands that teachers and staff at Jenkins Middle High School and Burdine Elementary School would still be subject to the tax and that if the measure passes, the only teachers and staff members in the Jenkins system who would not pay the tax would be those who work at McRoberts Elementary, which is not in the corporate limits of Jenkins.
“It would be crazy (to move the office),” said Narramore. “I told someone that we could move but I was joking. Besides, what difference would it make? I should know better by now, but it was an off the cuff remark and had no validity.”
Councilman Damron pointed out another problem at the work session facing the city, that of annexation. Although the city can annex land without the consent of the people living on it, it is a more difficult process and can involve litigation. Damron said some people on some of the prime commercial property lying adjacent to city limits want the city to provide fire and police services as well as water to them but do not want to pay city taxes. Damron said the lower costs of fire and homeown- er’s insurances would offset a significant portion of the property taxes, but people on Joes Branch and other areas of the city along US 23 and Highway 805 have resisted annexation. All the council agreed that development of the area running along US 23 in the city limits is key to the city’s future.
Mayor Kincer also gave the council some possible good news, saying that a dialysis clinic may locate at the Gateway Industrial Park if the Industrial Authority approves the request to locate the clinic there. Kincer said Dr. Said Yusuf is interesting in locating a clinic in Jenkins if the Industrial Authority approves it.
One of the chief complaints most council members had was that people in Jenkins have refused to purchase city stickers and that Jenkins police officers have not pursued the matter aggressively enough. DePriest said whatever the council does with tax reform, the city stickers ordinance must be enforced and several council members said it was offensive to see how brazen some people were in their refusal to purchase the stickers.