Fort Thomas City Council passed its fiscal year budget for 2025-2026 at its June 16 meeting, along with the budget amendment for fiscal year 2024-2025 and pay classification adjustments for the coming year.
Total revenues come to $20,693,774. Operating expenditures are expected to be $20,080,798. Capital expenditures (city and road improvement projects) will be $8,152,727, bringing the total expenditures to $28,233,525.
In his budget summary, Mayor Eric Haas said the budget is healthy and includes several ongoing city projects. He did note that operating expenditures will increase by 12% over the past year. The increase, he said, is mostly due to health insurance, wage increases and the addition of three new full-time staff positions — two greenspace workers and one facilities custodian.
Looking at future budgets
The increase led to a discussion about future budgets and concerns.
“The city has elected to spend or allocate over 10 million of our reserve funds in the past three years,” said Haas. “This was specifically for two large community projects, the Tower Park program and the completion of the Midway streetscape.”
The city has held a sizeable reserve balance in recent years to cover those special projects, the mayor said. Although the city has not raised the property tax rate in recent years, with the rise in operating costs and potential plans for future projects, he said staff and council should meet to discuss whether to consider a tax increase this year or in the future.
“It’s critical to discuss our financial plan moving forward to ensure the city is able to support and enhance operations in the future, along with continuing to improve the city by supporting the services and enjoyment of our citizens,” he said.
Council member Andy Ellison said, “If you look at where we are in the trajectory, the increases in expenses and the increases in revenue. I think we’re financially sound. But I just want us to make sure that our trajectory is laid out to where we have a program for capital budget projects 20 years from now.”
City Administrator Matt Kremer said city staff plans to bring the issue to the council finance committee for a full discussion.
“We’re going to discuss with the finance committee, lay out what we’re wanting to do in the next 20 or 30 years,” said Kremer. “I’ve been working on a 10- to 20-year vehicle. I’ve got a good 10-year plan, but we really need to push out.”
Investigating pension spiking issue
Another issue came up right before the budget vote. The state of Kentucky is asking the city to cover costs and fines related to a pension spiking issue.
Pension spiking occurs when a person nearing retirement works a large amount of overtime aimed at increasing their salary in the last few years before retiring. This can boost a person’s retirement income based on their highest earning years.
In 2017, the state passed a new rule limiting the amount of salary increase allowed in the last years before retirement. For those retiring in 2021 and beyond, the amount of salary increase is capped at 10%. The state did include several exceptions to the rule, such as raises due to promotions or emergency staffing needs.
Fort Thomas had received a letter from the state noting some staff had increased their salaries beyond the allowed 10%. Between the costs to the system and fines associated with it, the state said the city owes $277,000. The city has been trying to negotiate with the state to have that amount reduced.
Kremer shared the information with council on June 3. This sparked a discussion and concern over when and how the situation was allowed to occur.
While Kremer said he was looking deeper into the issue, council member Adam Blau said he wanted a full official investigation. He made a motion to have Kremer investigate and report back to council within 60 days. The motion passed.