Imagine calling 911 because your sick grandmother needs an ambulance ride to the hospital, only to have no one answer the phone at the 911 center because all the employees were laid off, and to later find out that there were no ambulance drivers because they had all been told not to come to work either.
It’s a scenario potentially facing Whitley County if the fiscal court doesn’t pass a balanced budget by July 1, and as of a special meeting last week this hadn’t been done.
“If we do not have a balanced budget, the fiscal court cannot write a check. Statutorily the county judge, and the county treasurer would be in the courthouse, but we can’t pay for anything, and we can’t be paid,” Patrick said. “We can’t work people that we cannot pay that means that every employee that is paid directly by the fiscal court, will have to be told on June 30, don’t report to work on July 1.
“We are getting into a situation in my opinion where lives can come into jeopardy. When you start considering total shutdown, you may affect somebody’s life that scares me.”
Cordell Lawrence, Deputy Commissioner for the Governor’s Office of Local Development, said if the county doesn’t have a balanced budget by July 1, then the state will sue Whitley County. The office will go to circuit court to seek an injunction requiring the fiscal court to go back into session until a balanced budget is passed.
“Really the ball is in the hands of the fiscal court to take an action between now and June 30,” Lawrence said. “By June 30, we will then file a lawsuit in circuit court to call them into special session to approve the budget. We (the state) don’t take over operation. It just shuts down, basically all services.”
The circuit judge would have some latitude in ordering that some or all employees could report back to work, such as 911, and ambulance workers, Lawrence added.
During a special called meeting Friday morning, the fiscal court deadlocked over whether to implement a 1 percent occupational or payroll tax with Judge-Executive Mike Patrick and Magistrate Burley Foley voting to approve the first reading of the tax, and Magistrates Johnny Lawson and Wayne Wilson voting against it.
Magistrate Nolan Bird didn’t show up for Thursday’s meeting.
It was the second time in nearly three weeks that fiscal court members had failed to implement a proposed payroll tax, which the county treasurer and members of the Governor’s Office for Local Development say is the only way the county can balance its budget, pay off a deficit from this year, which totals over $800,000, and not make drastic cuts to services.
“We’ve worked every scenario, and the only way to do it is to increase revenue,” Lawrence said. “Even in cutting all the insurance that you mentioned, and ambulance service, and 911, and other what I call basic services, there is still not sufficient revenue to offset the expense of the other basic services that you are offering. It is a tough decision to be made.”
“We went through 20 different versions of the budget trying to look at it from different angles for a caretaker government,” said County Treasurer Jeff Gray. “Even if the court was to shut down all non-essential services or non-mandated services, we still cannot have a balanced budget due to the debt service of the county.”
Three weeks ago, Patrick told fiscal court members that even if a payroll tax was passed, the county would have to cut one ambulance service crew, eliminate health insurance for county workers, and cut $107,000 in funding for the sheriff’s department in order to balance the budget for the coming fiscal year, which starts July 1.
Patrick told court members Friday that he has spoken with the bank, which agreed to allow the county to pay back the money over a three-year period, and that the state has agreed not to fight the proposal.
By paying the money back over three years time, Patrick said the county will still be able to provide insurance for employees and not have to cut funding for the sheriff’s department or ambulance service providing that the county pays a 1 percent payroll tax.
“We can’t do any of that without an occupational tax. It is still required to do it,” Patrick said.
Because county officials didn’t pass the payroll tax Friday, fiscal court members tabled the remainder of items on the agenda for the meeting, including consideration of the budget ordinance, which was written up based upon the payroll tax being approved.
Patrick said there is still time for the county to implement a payroll tax before July 1, but that given the matter has died twice, the county has to consider other options.
Patrick said Friday that he’s not sure where the county goes from here, but that he planned to try and put together a bare bones budget for a caretaker government, and that he hoped to call a special meeting for this week so the fiscal court could consider it.
“I’m skeptical we can put together a budget that doesn’t have an occupational tax, and somehow balances,” Patrick said. “I’m skeptical that we can do that, and have a budget that is accepted by Frankfort. We will have to start looking at cutting back health insurance, employees, whatever it takes to make the budget acceptable to the state. We have to present that then to the court, and say is this the way to go.
“Failing that, then I think we need to take a serious look at what we need to do as of July 1 as far as what I consider is basically shutting the county government down, and be prepared to go into those meetings as ordered by the court.”
Patrick said the county has 100 employees, whose jobs are in limbo.
“How long are they going to be in limbo? I don’t know. It takes people to perform the services. If I don’t have any ambulance drivers, how can I run the ambulances. If I only have one driver and I only have three ambulances, how do I do it,” Patrick asked. “What happens if we have a storm, and a tornado comes through. If I can’t work the road crew, how can people get out.”
If the government shuts down July 1, Patrick said he will be still be at work, even if he can’t pay himself.
Patrick said Friday that there are still a lot of questions that he doesn’t have answers to, such as what to do with 200 prisoners at the jail if the county has to shutdown.
Even if the county were to pass the first reading of payroll tax ordinance, the ordinance will have to be advertised for seven days prior to having a second meeting where it can be approved.
Patrick said even if the county has a special meeting to approve the first reading of the ordinance this week, it will still be difficult, but not impossible to get the second reading passed before July 1.
Why the ‘No’ votes
Wilson said he voted against the payroll tax ordinance because the first time he saw it was 10 minutes prior to the last meeting where he voted against it.
“How do you expect me to make an intelligent decision about anything without knowing what is going on,” Wilson said. “I’ve had time to look it over since then. I realize myself that we owe it to the taxpayers to look at everything before we go for something like this.”
Wilson said when he ran for office, he didn’t promise people anything other than he wouldn’t vote for any new taxes.
“I felt like I sort of obligated myself. I can’t vote for it,” he said.
Wilson admits that he doesn’t have any better ideas for balancing the county’s budget short of a payroll tax right now.
“I can’t honestly say I do,” Wilson said. “I think we ought to explore every option. I think we owe that to the tax payers.”
When asked the same question, Lawson replied, “We talked about two other things, but I don’t know if they can be done or not. These people from the governor’s office were asked to come by the judge to overlook, and see what we can do. They were not sent.”
Lawson said he wants to see where the money from a payroll tax would go, and what portions of the tax that Corbin and Williamsburg would get.
Patrick said the answer to those questions were in the budget.
Because Whitley County has a population of at least 30,000 people, it is limited by law to passing only a 1 percent payroll tax. Because of those population figures, under state law, Corbin and Williamsburg could then pass their own payroll tax, which would come out of the county’s share. This assumes that the county doesn’t work out an agreement with the cities to give them a certain percentage of the occupation tax.
“The cities haven’t even been talked to about what kind of percentage they would get of this money,” Lawson said. “We’re not sure where it is going to go. We are going to have to have a few more special meetings before June 30 before we can make that final decision.”
Lawson said at this point he doesn’t plan to vote for the payroll tax.
Wilson and Lawson said they still want to look into selling some surplus property.
Patrick told magistrates Friday morning that the county had found about 80 to 100 acres of land it owns in the Ky. 92 area, which is divided up into three tracts of land, but that two of the tracts have deed restrictions, and he isn’t sure whether the county could sell the land.
Fiscal court members unanimously agreed Friday to table discussion on the matter until this month’s regularly scheduled meeting, which is set for next Tuesday, in order to give the county attorney more time to research the matter.
What can’t be done
Patrick said the county doesn’t have the option of implementing a local sales tax, or a tax on utilities as some in the community have suggested.
The county only has three options available to increase revenue, which includes a property tax, which is already in place, an insurance tax, which couldn’t be implemented this year because the deadline for doing so has already passed, and implementation of a payroll tax, Lawrence said.
“A sales tax is currently not an option. I know there have been proposals through the General Assembly to make that a local option, but it is still at this stage still a proposal to implement a sales tax at a local level,” Lawrence added.
Last time it happened
Lawrence said the last time that the state had to sue a county in circuit court to make them pass a budget was about seven years ago in Breathitt County.
It took fiscal court members about 15 days to pass a budget, and implement a payroll tax.
State officials said Lawrence County is doing very well financially since passing the tax.
Lonnie Campbell, an assistant director in the Governor’s Office for Local Development, said the circuit judge in Lawrence County ruled that the courthouse could stay open, and that the county clerk could collect taxes, but it would be up to a local circuit judge to make that determination.
Because Circuit Judge Jerry Winchester is the father of County Attorney Paul Winchester, all cases concerning the county are handled by Circuit Judge Paul Braden.
How it happened
Campbell said the fiscal court is currently facing a deficit of over $1 million due to a variety of reasons.
“The real reason it has happened is because there have been a tremendous amount of jail costs,” Campbell said. “Other areas have gone up to0. As you heard today, insurance is going up. Employee retirement is going up. The jail is a big issue, and it is an issue all over the state. Jails are just expensive.
“There are no jails out there making money. You’ve had to borrow money to operate it. Basically, you all have been borrowing money just to run operating expenses, that will catch up to you.”
Campbell said this is basically the equivalent of a person using their credit card to pay for monthly expenses, and then maxing out that credit card.
Unlike individuals or businesses, the county can’t declare bankruptcy.
Patrick declined to elaborate on how the county got in such a financial predicament.
“Our problem is how do we get from here that is the real problem we are facing right now,” Patrick said.
Tax would bring deputies back
Sheriff Lawrence Hodge has already laid off four of his deputies and one secretary because the fiscal court announced plans to cut $107,000 out of his budget, which he said goes to pay those deputies salaries.
Had the fiscal court approved the payroll tax Friday, Hodge said he would have been able to bring his deputies back to work very quickly. Hodge said all he needs is the guarantee that the money will be coming.
“I don’t think they have a choice but to pass the tax. What are they waiting on?” Hodge said. “Why make everybody suffer. I know one of them is kind of helping himself to run for jailer. This isn’t the place for politics. I think he thinks this will help him, but this won’t help him I promise.”
In the event of a government shutdown, Hodge said that even though his office generates enough money to pay employees, he would still have to lay off all workers because the county pays social security and retirement benefits for employees, and he can’t require them to work without their social security being paid.
“I guess the elected officials will be here, but what can one man do?” Hodge said. “I would think we would have to have the tax office open, but I don’t know.”
Clerk’s office stays open
Even if most of county government shuts down, Whitley County Clerk Tom Rains said he would be able to keep his office open since it brings in enough fees to cover its own budget, but that it would be difficult.
Rains said he would have to pay for some supplies, which the fiscal court currently pays for his office, but that he’s not sure how he would pay for the elections if the county wasn’t back in business next year.
“That would be pretty tough for me to swallow that lick. Annually, it would be $80,000. I don’t know if I could, but I would try. I might have to cut services to do that,” Rains said.