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Kentucky League of Cities Watching Pension and Tax Issues

Alexey Stiop, 123rf stock photo

More than just current state workers and state retirees are waiting to see what pension reforms come from the Kentucky General Assembly. Local government officials are keeping close tabs on developments in Frankfort.

Kentucky League of Cities Deputy Executive Director J.D. Chaney said local mayors and city officials are hoping changes will be phased in over time.

“It’s is going to have critical impact on the provision of services, number of employees in our city government,” said Chaney. “So, if we don’t get a phase in and address the affordability of paying those assumption rates, it’s going to be a hard day on July 1, 2018.”

Chaney said many city and county officials favor removing their employees from the state system. It remains unclear when a modified pension reform bill will be filed in the Kentucky House or Senate. He also said many city officials want more flexibility in local taxation.

“We have no consumption based element in the tax menu for local governments as constrained by the constitution. That’s why cities are wanting to explore expansion of the restaurant tax from an equity standpoint. Some cities can do it and some can’t,” said Chaney.

Chaney said two other key legislative issues are reducing state mandates and capturing a bigger share of gas tax revenues at a local level to address road needs. He also said city government leaders would like to see a re-distribution of state gas tax revenues.

“82% of the local government proceeds goes to county government. Only 18% goes to city governments, even though they spend about the same amount of money each year, cities do on maintenance of city streets and construction of city streets and counties do on county roads,” said Chaney.

Chaney said the original distribution formula was developed with a focus on rural Kentucky. The League of Cities representative said today more than half of the population of Kentucky lives in cities.

Stu Johnson is a reporter/producer at WEKU in Lexington, Kentucky.
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