Kenton County voted last week to increase its occupational license tax to help decrease property taxes and better align with other counties in the state, such as Boone and Jefferson.
Kenton County Treasurer Roy Cox said the county currently puts more of a burden on the property owners in the county by having a higher property tax.
Kenton County currently only gets 35% of its revenue from occupational licenses, whereas 66%-90% of Boone, Jefferson, Fayette, and neighboring Hamilton Counties’ revenue comes from occupational licenses.
The Kentucky League of Cities describes an occupational license tax “as a percentage of gross earnings (payroll) on all persons working within the city or on gross receipts or net profits on all businesses within a city.”
Kenton County currently has the lowest rate and the lowest cap for its occupational tax. The cap has not changed in the county since 1978, and the rate hasn’t changed since 1995.
The purpose of the new occupational license taxes is to “fund the general operating expenses of the county, including, but not limited to, public transportation, mental health and intellectual disability services, senior services, and other general and administrative services or expenses.”
Kenton County previously followed a salary cap of $25,000 since 1978; if they had followed the Consumer Price Index, which is a measure of the average change over time in the prices paid by consumers for goods and services like Boone County does, their cap today would be $121,510.
The occupational license tax fee in Kenton County will be measured by 0.9097% of the amount of all wages and compensation paid in the county for work done or services performed by every resident and nonresident who is an employee.
The occupational license tax fee in Kenton County will not follow Consumer Price Index. It will track the Social Security cap.
The tax will be measured up to 50% of the maximum taxable earnings applicable to the Federal Social Security Program (Old Age, Survivors, and Disability Insurance) and automatically adjusted annually. Fifty percent of the current Social Security is $73,500.
Cox said people paying an occupational license tax would get information from the county each year, telling them the new rates.
Cox explained that the county is following the Social Security Program and not Consumer Price Index because other fees the county has (for mental health and senior services) are already tied to the Social Security max.
Since the taxpayers are already used to that, Cox said the county thought it would be easier to continue, along with Social Security.
“What we’re going to pass tonight, the ordinance that’s before you, our cap, even though legislatively we can have the ordinance say we can go up to Social Security max, what we’re proposing is 50% of that, which will be 73,500,” Cox said. “So, we will actually be a couple of $100 higher than Boone County on the cap in our range cover.”
Kenton County Judge/Executive Kris Knochelmann said that future courts could go into the ordinance and change it if necessary.
“We don’t want to collect more than we need when you talk about basic services, but we have to have a sustainable model, and it’s really nice now when you look at it to say both Kenton County and Boone County have a very similar cap, rate, and we can fund the government on that basic level,” Knochelmann said.
Kenton County Commissioner Beth Sewell pointed out that the county had reduced property taxes two years in a row and said this ordinance would help the county continue to do that.
“Whenever you introduce a new revenue source, you got to hope that the people that are sitting here continue to raise their hands to lower the tax on the rooftops,” Kenton County Commissioner Joe Nienaber said. “The whole goal of this should not be to generate new money to spend. It should generate new money to take the tax burden off the rooftops of the people of Kenton County.”
Knochelmann agreed with Nienaber. He said the Fiscal Court would continue to reduce property tax.
“This will set up Kenton County for financial stability for decades,” Knochelmann said. “This may go down as the most consequential thing we’ll have done to fix the long-term financial health of the county.”
