By G. MICHAEL GRAHAM
Fort Thomas Matters Reporter
Stories
about cities going bankrupt have grown more common in the news over the past
couple years.
Cities like
Stockton, California and Harrisburg, Pennsylvania among other cities have done
that. But City Administrative Officer Don Martin said Fort Thomas is not in
that boat, nor is he aware of any other cities in Kentucky that are.
Martin said
the main reason is Fort Thomas takes a conservative approach toward spending.
Also, Martin said Kentucky cities must balance their budgets annually by law,
unlike the federal government.
“Like an individual’s personal budget, the best way to
avoid bankruptcy is to not spend more than you make,” Martin said. “In
other words, make sure that the expenditures remain below revenue. Last year,
the city eliminated the Assistant to the City Administrator and Recreation
Director positions and shifted those responsibilities to other employees. This
was a proactive approach to address expenditures to help ensure the city remains
on solid financial ground.”
Martin said
the city has three main resources for revenue streams. The property taxes
generate about $4,056,000 in revenue with approximately $2,030,000 coming from
payroll taxes and about $2,125,000 from insurance license fees. Martin said
those three sources make up about 80 percent of the city’s income. Martin said
Kentucky limits the abilities for cities to increase income streams. Property
tax revenues are limited to four percent annually. Cities are also not allowed
to have sales taxes.
Martin sent
a chart on the property tax increases. They stood at 36 cents for every $100 on
a home value last year. Property taxes went down 2.62 percent in 2010 before
increasing by 3.89 percent in 2011 and another 3.75 last year. The chart listed
a home worth $200,644.92 would have an annual tax of $670.22 in 2010 and that
increased to $696.31 in 2011 and $722.39 last year. That annual mark was the
highest in property taxes since 1989 when it would have produced $700.52 on a
home of the same value. The lowest the property tax has been per $100 was 29.3
cents in 1994.
“Our department heads all focus on finding savings in
their budgets and on alternative sources of funding, such as grants,” Martin said. “Additionally,
cities that seem to be struggling the most rely heavily on employee payroll
taxes driven by businesses. When the economy sours and jobs are lost, those
cities lose a great deal of that revenue. Property taxes provide a very stable
revenue source that is not directly tied to those economic downturns.”
Martin also
listed a chart that compared Fort Thomas to similar property tax rates in other
cities in Northern Kentucky. Fort Thomas ranked 24th lowest out of 36 Northern
Kentucky cities. The lowest was Crestview Hills at 15.2 cents per every $100 on
a home value and Elsmere was the highest at 54.6 cents.
Martin said
the biggest financial challenges cities face is the increasing cost of health
insurance and meeting employee retirement system contribution requirements.
Martin said cities can’t do much about either.
“The city and its three labor unions agreed to
contract changes that provided the city greater flexibility when selecting
employee health insurance plans,”
Martin said. “Accordingly, annual
increases in health insurance costs have been lower than many cities have faced
while still providing quality insurance for our employees.”
Martin said
Fort Thomas has been able to increase revenues without tax increases two ways.
The first is finding ways to attract new businesses like Omega Processing. The
main way they do that is keeping lower payroll taxes. The payroll taxes in Fort
Thomas stand at 1.25 percent compared to 2.5 percent in neighboring cities like
Covington, Newport and Dayton.
The second
way is looking for grants to buy equipment like a fire truck. Martin said the
city earns more than $100,000 in grants annually.
Martin said
one advantage Fort Thomas has is great volunteer support. He said they spend a
number of hours helping out the city at special events like the Merchants and
Music Festival.
“If the city had to fully fund the Merchants and Music
festival, it may not even occur,”
Martin said. “For the past several
years, the city has received more than $30,000 in donations toward the
festival.”
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