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Increased Pension Costs May Force Tax Increase in Ft. Wright

Ft. Wright city council is weighing whether to raise its tax rates as cities across Kentucky face a huge increase in pension costs.

Council heard the first reading to set the tax rate at 0.273 per $100 of assessed value for real property, and 0.397 per $100 of assessed value for personal property. At this amount, the city would only be adjusting to take the so-called compensating rate and would collect the same amount of revenue for the city as last year.

However, Mayor Dave Hatter said that since the city has so many increasing expenses on the horizon, particularly in regards to pension costs, there is a possibility of changing that tax rate to reflect the compensating rate plus 4 percent, the maximum allowed under state law without the need for direct voter approval.

"We have faithfully been sending 11-percent of our budget to the state to fix what they have squandered," Hatter stated. "It is no surprise that the legislators have the best-funded retirement system. (County Employee Retirement System) is the second-best-funded, but even though we have sued to separate the funds, it is my opinion the governor does not want to separate the two because it would leave a giant smoking hole in (Kentucky Retirement System). It would make the state problem worse."

Hatter said that the city is facing a payment for pension costs that could amount to a fifth of the entire Ft. Wright budget, and he stated that that was not sustainable in the long run. He said it was a ridiculous projection on returns, and it has resulted in substantial underfunding. Hatter said that the existence of cities is threatened.

"Only a government could do something this inept, this incompetent," Hatter ranted. "Everyone is impacted by the stupidity of the government."

Councilman Mike Hoerlein agreed.

"And it is worse for cities like Covington," he said. "I don't think that they can throw these numbers at us and expect us to pay. It is a crappy situation." The City of Covington approved a tax increase in part in anticipation of the increased pension contributions that are on the way.

Hatter offered gratitude to Gov. Matt Bevin for what addressing the pension problem.

Councilwoman Margie Witt asked what the options were, and asked what can be done for Ft. Wright.

Mayor Hatter recommended passing the tax ordinance as it is, and then regrouping before the second reading. He said that way, council could take the maximum rate hoping to offset the cost of the retirement system.

"We need to look for other revenue sources so that we don't eat into the road funds and other funds," he explained. "The tax money is your money that we are collecting. Right now our finances are in the best shape they can be. But we don't know how much health care is going to be, so we have to roll the dice and make the hard decisions now."

Councilman Adam Feinauer asked about other cities.

"Where is the push back?," he asked.

Hatter said several of the state's 435 cities have passed resolutions to separate CERS and KRS funds, but no other city has taken the invitation to join Ft. Wright in its lawsuit.

"There is no simple answer," Hatter said. "We have to make the difficult and unfortunate decisions now."

Other notes:

Councilwoman Witt talked aboutthe beautification project planned for along the expressway. She said that part one includes planting trees that will grow to a significant size at the I-75 interchange, and more trees at the I-275 interchange on Madison Pike. She said that she has lined up Boy Scout troops to help with the planting, so the cost of $1,072 for the I-75 part and $900 for the I-275 part would be reasonable. Council agreed with her and voted to allow the project.

An item related to trash collection was tabled because only four members of council were present at the meeting last week, and one had an issue voting on the item, so there was not a quorum to move forward. A special meeting will be held soon to address that issue.

The city has contacted the state about Amsterdam Road and Park Road, where street work by the state was not well-received by residents. An inspector sent out by the city agreed with city officials and residents about the quality of the work and the city hopes to have it fixed by the end of the year.

Marc Schworer was officially sworn in as police chief, taking the place of Dan Kreinest, who retired. Schworer's family was present to see him take the oath of office.

Written by Patricia A. Scheyer, RCN contributor