Kenton County mayors, city council members, government workers and officials of all kinds packed the Ft. Mitchell Community Center on Saturday for a meeting of the Kenton County Mayors group, where a debate about government transparency, economic development and political process ensued.
Several subjects were on the agenda, but the main source of contention for the mayors was an increase in Kenton County’s payroll tax rates and wage caps, which were raised by the Kenton County Fiscal Court on Nov. 8.
Covington Mayor Joseph Meyer was the first to speak. He began by trying to tease out numbers related to the policy change, including what he claimed would be 275% increase in payroll tax for the median wage earner in Kenton County and a 211% increase for taxes on profits. He postulated that the increase in revenue to the county would be about $10 million.
“There has been no discussion about how this extra money is going to be used,” mayor Meyer said.
Meyer went on to say that “the stacking of the county tax on the city tax represents a major change in public policy.” He then summarized changes that had occurred in Kentucky statute relating to city tax credits and the process behind raising business taxes. Most notably he referenced a change that occurred in 2021 with the passage of Kentucky House Bill 249, a revenue bill that amended Kentucky statute to allow fiscal courts in counties with more than 30,000 people to increase payroll tax rates without a public referendum.
“That’s a huge public policy change,” Meyer said, “and it occurred without any discussion or notice to the public.”
What’s more, the timing of the rate change—on Election Day when everyone was busy at the polls—was uneasy. Many at the meeting felt they had not been consulted about the change before it was made.
“Finding out about it after the fact was very concerning,” said Chris Reinersman, mayor of Independence.
Other members of the group expressed similar sentiments, directing their questions to Kenton County’s Judge/Executive Kris Knochelmann. Some feared the rate increase would drive away potential economic development in their cities.
Knochelmann began by casting doubt on mayor Meyer’s numeric speculations, saying that some of them were “simply not correct,” although he did not offer specifics.
Knochelmann said that the issue the court was attempting to solve was the “balance of revenue generation” between payroll and property taxes.
He added that if the wage and profit caps had not been raised, “the county would long-term [and] short-term be in a very, very horrific financial condition.”
He admitted that he could have been more transparent with the court’s decision; however, he defended the court’s actions, characterizing the previous $25,000 cap as outdated and incapable of meeting the county’s service needs.
The judge/executive also claimed that the raised rates would not disincentivize new businesses from moving to cities in Kenton County: “It doesn’t affect economic development.”
On contrary, he claimed. Improved financial stability across the county would do more to draw in new businesses, who would be attracted to the region’s communal stability.
Mayor Meyer responded by saying “The talk about how this isn’t a disincentive for economic development, it’s just contrary to the beliefs and the reputation and the talk for the past 40 years about the government’s payroll tax.”
Other mayors shared their views, as well. Erlanger Mayor Jessica Fette reiterated the need for transparency between government agencies. Ft. Mitchell’s Mayor Jude Hehman, meanwhile, said that the change would likely have various effects throughout the county’s 19 cities, noting that he didn’t believe the tax increase would impact Ft. Mitchell.
Kenton County Commissioner Joe Nienaber then offered further defense of the fiscal court’s actions, claiming that the increased payroll tax would shift the burden off of local home owners and onto workers commuting in from out of the region.
“Property tax is what drives economic development,” Nienaber said. “The owners of these businesses don’t care because they’re not paying [payroll tax]. Their employees are the ones who are going to be doing it.”
Conversation continued, especially about the issue of whether the decision ought to have been put to a popular vote or not.
Towards the latter part of the discussion, Republican State Senator and Kenton County resident Chris McDaniel took the floor to speak about the issue of political procedure. Specifically, he talked about using revenue bills, such as House Bill 249, to change policies.
“That’s not necessarily an atypical tool,” he said.
He claimed that amending statute through the use of revenue bills has accomplished many necessary policy changes throughout the years: “We did the historic preservation tax credit, which is huge for urban redevelopment.”
He added, “We did the film tax credit changes that was necessary to bring these productions here,” referencing the recent filming of the upcoming movie Wise Guys, starring Robert De Niro, in Covington.
“Nobody particularly likes the short-term,” McDaniels said, “but the long-term view that we all have to take in this is there are certain things that must be done. Do the finances work, or do the finances not work?”
“The finances don’t work,” he said, “so these are changes that are necessary.”
The Fiscal Court will hold information sessions for the public about the tax increases at the Covington Court House on Jan. 25 and Feb. 7 at 5:30 p.m.
The Mayors Group will hold its next meeting at the Independence Senior Center on Feb. 18 at 9 a.m.