In Olive Hill the city council recently approved a 0.5 percent increase in the occupational tax, raising it from 1.5 percent to a full two percent.
In Grayson the council is considering a similar step – debating whether a 0.5 percent increase is going to be sufficient to meet their needs, or if they need to raise their rate an entire one percent to match Olive Hill’s two percent.
Both cities have a number of infrastructure projects, like pothole repairs and water leaks, they could put the extra funds towards. In Grayson the funds would allow the city to approve the mayor’s proposed $5 per hour pay increase for all police officers without cutting promised raises for firefighters or gutting other departments and programs, with funds leftover for those other departments and projects.
But why now? Why are both communities suddenly looking at a tax increase?
One answer, of course is the same inflation we’re all seeing. Things are costing municipalities more, the same way they are costing you and me more. That means they’ve been paying more for fuel for their vehicles and chain saws and lawn mowers. They’ve been paying more for parts and equipment, and waiting longer to get them.
That also means their employees spending power isn’t going as far, and they are going to start requesting cost of living wage adjustments at some point too. All of them, not just the police department.
But there might be another reason behind these current pushes to increase the occupational tax rate, other than simple inflation.
No one has come right out and said it, but there is a proverbial 500 pound gorilla in the corner at all of these budget meetings and discussions of tax increases – the potential consolidation of the high schools. East and West Carter High Schools are both located within city limits, and both contribute significantly to the tax base of both communities. And while no one has said they’re considering these increases because of fears the two schools might close, Olive Hill mayor Jerry Callihan has mentioned the lost tax revenue as one of several reasons he opposed any potential school consolidation moves. (Along with the role the school plays in community spirit and identity.)
If the schools do eventually close and consolidate, an increase now will not only let the communities keep their tax income up despite the loss of jobs, it should also allow them to stockpile some extra funds in the leadup.
Superintendent of schools Dr. Paul Green has said that if the schools consolidate, it will be at least four years before any new school opens. If Grayson doubles their tax, from one percent to two percent, they can double the amount they collect from those school jobs in the interim.
In Olive Hill, where the tax increase was only one half of a percent, the extra revenue collected over that period will be more modest. But it could still help the community weather the loss of those jobs.
No one likes to pay more in taxes, especially now as we’re all being pinched more by inflation, rising costs, and stagnant wages.
We particularly worry about the impact of these occupational tax hikes on lower wage employees. They are the ones least equipped to deal with the loss in actual take-home pay and most likely to feel the impact of losing a few extra dollars per paycheck.
However, Olive Hill has already made their decisions, and it seems likely that Grayson will eventually follow suit and raise their tax as well.
Everyone who works or lives within city limits expects a certain level of service, after all. Everyone needs to drive on the roads to get to work. Neighborhoods need water to flow to fire hydrants and homes. These services all have to be paid for by someone. That someone ultimately ends up being the folks who live and work there – even if it passes through the city first.
They’re going to take it. But it’s up to you to monitor how they spend it, and make sure they’re doing it properly and for your benefit.
It passes through the city first, but it’s your money. Don’t forget that.