By Jeremy D. Wells
Carter County Times
Local carpenter and millwrights union rep Jerry Yates has been advocating for fair bidder ordinances in the county and cities here for several years now. Such ordinances would require the city or county to make sure that every contractor working on a city or county project is following all applicable laws related to fair labor practices, and that they are paying the appropriate payroll taxes. The ordinances advocated by Yates and his union hall also place a priority on hiring local contractors. But the most important part of his advocacy for local governments, or at least their bottom line, is the way it helps a community combat tax fraud.
The Indiana Kentucky Ohio Regional Council of Carpenters (IKORCC), Yates’ union, estimates that Kentucky loses around $18million a year in tax dollars from misclassification alone. That doesn’t include the funds lost to other, more blatant tax fraud.
It’s money that the state could use for teachers, police, and economic development, among other things. But it is also reflected in lost revenue for local communities through things like payroll taxes that other workers in the community pay.
“It isn’t fair,” Yates has said, of a situation where locals are paying payroll taxes but outside contractors working here are not.
Grayson mayor George Steele told the union reps and other local politicians that the information Yates provided to council on the issue before being elected (Yates is a Grayson city councilman as well) helped raise their awareness of the money they were losing as a city.
“We weren’t even aware this was going on,” Steele said.
Grayson ultimately passed a fair bidder ordinance, but both Olive Hill and the county fiscal court have yet to act.
That could possibly change with the next judge executive and fiscal court, though.
Duane Suttles, former Grayson councilman and current city clerk, is running for the judge executive position as an independent. Suttles was on council when Yates first brought the issue to their attention, then served briefly as the city’s code enforcement officer, and has seen how the fair bidder ordinance works in the city. He says that for the county to effectively enforce a similar law they might have to create a new position, but that it could prove worthwhile.
“After leaving city Council and becoming the city’s code enforcement officer in 2020, one of my main responsibilities was ensuring that any contractor work that takes place in the city be inspected, to make sure that the employers are on record with the city and that all of the employees are being accounted for and that the proper payroll taxes are collected by the city,” Suttles explained. “I know that over the last couple of years, the county has enacted an occupational tax at the same one percent rate as the city of Grayson and knowing what the city brings in each year gives me a good idea of how much additional income is streaming into the county’s tax revenue. Carter County is the 38th largest county in the state as far as square miles, and it would be very difficult to make sure that all employers that are performing work within the county are remitting the proper occupational taxes so I would investigate the possibility of creating a position that focuses on assisting the treasurer’s office in the enforcement of that occupational tax.”
He also agreed with Yates that not enforcing the law consistently is unfair to those who pay their taxes.
“The few who skirt by the law in paying their fair share cause those who are honest, and supportive of the county’s revenue, to pay a higher percentage of what is collected, causing the burden to fall on fewer people,” Suttles added.
Dustin Howard, who is running for judge in the Democratic primary, said his experience as a small business owner impacted his perspective and that he felt a lack of information about tax law was also an issue.
“You know there are obviously people out here who are doing this, as far as tax fraud,” Howard said. “But on a smaller scale of things, people are uneducated about what taxes are supposed to go where, as far as city and county government.”
Part of this, he said, has to do with how recently some of these tax laws have passed.
“A lot of it, like the payroll taxes, are newer to us, to the county, to the city, and there are a lot of people that aren’t sure how to collect them.”
He said events like the IKORCC forum, to educate folks, are important because of that.
“There are things I learned today,” he said.
Vic Adams, one of the candidates running in the Republican primary, focused on the potential lost revenue for the county.
“There’s no doubt the county is losing money right now with the way things are done,” Adams said. “We have an occupational tax in place right now, and we’re collecting off of it. But there isn’t a good way in place right now to take into count the things they discussed here today, around contractors coming in and then leaving (without paying their taxes). So, my take on that is we need to get a process in place where they’re required to come into the judge executive’s office and actually pick up a work permit prior to starting any work.”
Adams said that would also give the county the opportunity to explain all the requirements to those contractors, such as worker’s compensation and occupational safety requirements, as well as making sure they and their subcontractors were paying the appropriate taxes.
“There should be a way to make sure everyone gets their money paid right,” he said. “It’s all about checks and balances,” which most of the county departments already have in place, he added.
But, he said, it’s “definitely a problem,” the county needs to be more aware of.
“All that could go to roads,” Adams said. “Right now, I think the occupational tax brings in $390,000 a quarter, that’s $1.5 or 1.6 million a year that can go straight to the roads. But what are we losing (to fraud)? I’m sure it’s another $100,000 a quarter, another half million a year. So, there is a lot of money there, and we’re hurting right now. The county is hurting for money, no doubt about it.”
Contact the writer at editor@cartercountytimes.com
