A lopsided tax swap

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The three city commissioners who brought us pay-as-you-throw garbage collection now propose pay-more occupational taxes and pay-less property taxes – the former to help balance the 2012-2013 budget and the latter to help the medicine go down. It will be interesting to see whether the informal decision, subject to approval at a later meeting, helps or hurts their re-election prospects this fall.
This tax program, like most, entails both winners and losers. People who own homes in the city will get a small break from the proposed 2 percent reduction in property taxes. The occupational tax hike won’t affect them if they work elsewhere or not at all. That’s good for retirees who often struggle to pay household expenses even with the Homestead Exemption lowering their assessments, but it won’t help that much. The owner of a $100,000 home would receive about a $4.26 discount on a $213 city tax bill – certainly not enough to sway many votes, it would seem.
The biggest losers may be state employees who work in Frankfort but live outside the city. They’ve already had a rough ride with no cost-of-living adjustments the past two years, unpaid furloughs last year and no raises budgeted the next two years. Some of them will be upset with city leaders prepared to take an even bigger bite out of their paychecks, but the local politicians probably don’t worry much about taxpayers who can’t vote for or against them. And some city voters will likely agree with putting more of the burden on non-residents. It’s taxation without representation, of course.
Commissioner Bill May, who joined Mayor Gippy Graham in opposing the budget solution offered by Katie Hedden, Michael Turner and Sellus Wilder, said the occupational tax increase – from 1.75 percent now to 1.95 percent if approved – “will hit every employee trying to make a living wage.” Someone earning $40,000 who now pays the city $700 a year will have to fork over $80 more.
Municipal employees pay taxes, too, but they’ve fared better than their state counterparts. Besides granting city workers cost-of-living adjustments, the commission has agreed to continue their longevity pay, which was scheduled to expire at the end of this month under a cost-cutting strategy approved by the previous commission. Longevity incentives periodically reward career employees with special pay increases in addition to any across-the-board raises, and commissioners want to preserve these supplements in the interest of retaining qualified staff.
Off the table, apparently, is any thought of raising the fees for garbage collection. The $5 monthly charge enacted by the previous commission was highly controversial and pay-to-throw adherents made a point of keeping the current rates low for people who use smaller refuse containers, even though that decision reduced city revenue. Supporters maintain pay-to-throw will cut costs in the long run by shrinking the volume of  waste going to the landfill.
Like pay-as-you-throw, the new revenue trade-off will be to the liking of some and the disapproval of others. But it should serve its purpose. City Hall  expects to net about $710,000 by growing occupational tax revenue more than it cuts property tax revenue. Voters will have an opportunity to pass judgment, one way or another, in November.

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