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Ken Rechtin's Another Voice: Fair to Compare NKY Cities to Each Other?

Our last three columns/discussions have dealt with corruption in Kentucky in general and in NKY in particular. I have suggested, as has State Auditor Adam Edelen, that the numerous governments here in NKY may be a contributing factor. I have also suggested that one way to make sure that there is a check on the spending and the taxation within each of these governments is to have a comparative financial database of all. When we compare, we can improve. When we compare, we can see if something is out of line!

Most of you agree, some do not! 

When Mayor Dave Hatter of Fort Wright saw the column, he immediately said that he was already comparing his city to others in NKY. He began doing comparisons because he wanted to know how his city was doing! That sounds really logical to me. You find out how you are doing by comparing yourself to others!

So, I had breakfast with the Mayor of Fort Wright, the Honorable David Hatter. Of course we had goetta… (don’t know if it was Finke’s).

Fort Wright citizens, you are very lucky! Mayor Dave Hatter is one very dedicated, brash, analytical, tightfisted, passionate, geeky advocate for you and your city! 

(In full disclosure, Dave and I have served on the Northern Kentucky Chamber of Commerce Board of Directors together. He and I are members of different political parties. Our national politics may be very different but, I would say, and I think that he would agree, we are friends. And, on many local issues, Dave and I agree! See, just 
because our national politics are different, doesn’t mean that we must always disagree and be disagreeable!) 

Dave took the time to meet with me, share his charts and explain the comparative work that he has done on data from about 23 cities and 3 counties in NKY. Dave has taken data that he received from the Northern Kentucky Area Development District (NKADD) and has begun comparing the cities. Dave is very adept around computers. He said that it took him about 12 to 15 hours to do the work that he has shown me. The results are very interesting!

Before we get into that: Where does the data that Dave has used come from?

Andrew Baker, Senior Community Development Specialist with the NKADD, says that the Northern Kentucky City/County Managers Association (NKCCMA), contracts with the NKADD to provide staff support to the Association (for an annual payment from the NKCCMA of $300.00) as well as perform a “salary survey” (for payment of $1200.00 from NKCCMA). The data requested for the salary survey has grown to include numerous other items (other than just salaries) of interest to the membership of the NKCCMA.

Mr. Baker is quick to point out that the role of the staff of the NKADD is only to request, receive, compile and to put the data into an excel spreadsheet. “We (NKADD staff) do not do any comparative analytical analysis of the data. The City or County Managers like Larry Klein, City Manager of Covington, and Jill Bailey, City Administrator of Taylor Mill, do that on their own.”

The data is self-reported. NKADD staff does not question the validity or accuracy of the data supplied, in all probability, by the city/county managers themselves. Andrew says that about 25 to 30 cities and counties (as well as a few Fire Districts) report data. This is the source of the data used by Mayor Hatter.

Many of our readers have indicated that it is unfair to compare. Some have indicated that “size matters”. Cities in Kentucky were classed according to their population (usually their population when they were formed). Some readers feel that it is unfair to compare different size/class cities.  Some have indicated that only cities that were of the same class be compared. Newport, population 15,273 according to the 2010 census was a 2nd class city and Ft. Thomas, population 16,325, the largest city by population in Campbell County, was a 4th class city. But, arguing in favor of the “size doesn’t matter” folks, Dave asks, “Why shouldn’t we compare?”.

He continues with the fact that each of the cities and counties are involved in very similar activities. Each of them collect money through a variety of taxes, each of them spends the money on very similar activities: policing, fire prevention, street maintenance, recreation, economic and community development, etc. So he asks, “Why not compare?”.

The only reason that I can see is some comparisons may not be favorable to all cities. 

If each Mayor and City/County Manager in NKY is as proud of their city/county and their accomplishments as Mayor Hatter, they should be happy to compare. Logically, we cannot say that each city is excellent. We cannot even say that each city/county is above average. Can we? Only by comparing one city’s results against another, do we learn which city is doing it the best. And then we can improve by imitating the best, for it is said that imitation is the highest form of flattery.

What else is being done in NKY to compare our governments?

About five years ago, a group of donors commissioned Northern Kentucky University’s Center for Economic Development and Analysis (CEAD) to compile the financials of all the cities and counties in NKY (Boone, Kenton and Campbell). The funders paid $250,000 for this work. The Director of CEAD, Janet Harrah, says that the Center has compiled five years worth of financial data. They have not done any comparative analysis on the data received. The comparative analysis will require additional funding and more time. Citing that this is “work in process” and needs further refinement, Janet Harrah does not wish to share the compiled data with the public yet. 

CEAD has used the Uniform Financial Information Report (UFIR), the reporting tool used by Cities and Counties in Kentucky to report their financial and other data to the State. This form is required to be submitted annually by each city or county. CEAD has only compiled data from cities and counties, not fire districts, not school districts, not library districts, and not any other taxing authorities.

So, back to the discussion with Mayor Hatter: How does Fort Wright compare? 

“Very well”, according to Mayor Hatter. Dave went into his findings at length. But, in respect of your time, I will only choose two comparisons that he showed me. One, a 
property tax comparison with three Forts in NKY: Fort Thomas, Fort Mitchell and Fort Wright. The other is a business tax comparison between Covington and Fort Wright.

The property tax paid to each city on an imaginary $180,000 house was $669.60 in Fort Thomas, $405.00 in Fort Mitchell and $462.60 in Fort Wright. Comparing these city taxes and fees is not as simple as just comparing the taxes paid, but this is a beginning. Each of these cities have additional waste fees. One of these cities assesses the property owners for street improvements. While the issue of comparing is somewhat complex, comparisons can be done! Those who choose to live in Fort Thomas know that their city property tax rate is higher. They choose to live there because of the benefits of above average city services, right?

For business taxes, some cities in NKY use a gross profit tax system (counties in Kentucky are mandated to use a gross profit taxation system) and others use a net profit 
tax system (and the fairness of each of these is open for discussion another day.) Because of this disparity (and some other taxes like the insurance premium taxes), some have argued it is impossible to compare business taxes. Mayor Hatter says it can be done and uses an example business which would generate gross receipts of $11 million with net profits of $1.1 million and a payroll of $5.3 million (Dave told me that these were the real numbers of a business looking to locate here in NKY). Dave then created the formula to compare the taxes which would be paid to each of the cities in his comparisons. The results vary widely from a low of $61,300.00 (Crestview Hills and four other cities in the comparison) to a high of $116,040.00 (City of Florence). Of course there are numerous other factors considered by the owner before locating a new business and each of the choice cities in NKY has other amenities to offer as well.

If this were your business decision, where in NKY would you locate?

We are really blessed here in NKY to have such a great variety of cities and counties. We have older urban areas, older suburban residential cities, newer suburban residential communities, older rural cities and rural farm lands. One can choose how much one wants to pay in taxes and what one wants to receive in city/county services. In one city, movies in the park are offered on Friday nights while in another city, recreation is not a function of city services. And in some areas, garbage collection is not even a city/county service. 

Dave tells a great story about Fort Wright: no debt, balanced budgets, expenses held in check, and excellent leadership. Mayor Dave Hatter is a good example of a new style of leadership here in NKY. He is not defensive of the status quo and is very willing to compare Fort Wright to any other city in NKY (or anywhere for that matter). All of Ft. Wright’s financials are on its website.

Dave even challenged me to find anything else that he could share on that website! This is true transparency!

OK, here’s your challenge for this week: Visit your city or county’s website, and answer the very simple survey questions about your city/county’s website. Click Here.

CORRECTION: An earlier version of this story incorrectly stated that the taxes paid to Florence, KY would be $216,040. The actual number is $116,040.

The views and opinions expressed here in “Another Voice” do not reflect the views or opinions of The River City News, its owners, writers, or editors. These are solely the ideas of Ken Rechtin. If you wish to make comment to Another Voice, Ken can be reached via email at [email protected] or you may leave a comment here. All rights to use of Another Voice in any fashion are retained by Ken Rechtin. Please contact him for any use of his columns.