Company hired to go after funding for Shepherdsville

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Shepherdsville: Financial woes

By Thomas Barr

 SHEPHERDSVILLE - The Shepherdsville City Council is leaving no stone unturned in its search for the millions of dollars needed to put the city in the black.

It appears all options are on the table following a special meeting of city council held Wednesday to discuss recommendations that the city should cut expenses, raise taxes and borrow roughly $4.5 million to balance the city general fund, repay the sewer fund and complete the inceptor line along the Salt River. 

The council discussed raising occupational, property and gross profit taxes, reducing employee benefits, reexamining the city's employee pay scale, increasing the city's share of the county insurance premium tax, tracking down delinquent taxes, raising sewer rates, even cutting council pay and liquidating city assets, including the Shepherdsville Government Center, which houses city government, including the police and fire departments.

The meeting, prompted by a recently released report outlining the city's financial situation and recommendations for recovery from Marty Brown of Public-Finance.com, yielded some progress as city officials discussed how to keep the city running while causing as little harm as possible to city residents, employees, sewer customers and tax payers.

Brown recommended the city borrow $3 million to complete the Salt River inceptor line project in addition to $1.5 million for the general fund to pay back the city's sewer fund. 

The city has selected Public-Finance.com to seek out the $4.5 million in bonds with the stipulation that the city not pay the 2 percent administrative fee if they are denied bond funds.

There was little discussion as to where, when or how the city would take out the bonds needed to get its house in order. In fact, city attorney Joe Wantland said city officials had no idea where the money would come from at this point, much less how they intend to pay it back. 

"We're working on that," he said. "We know we're going to have to get the money and we know we're going to have to pay it back...we can't stop city government."

City officials are hopeful reducing spending and increasing revenue will get everything back on track. 

Brown said to keep the spending the same, the city could increase its occupational tax by 66 percent. The city could also cut spending by 28 percent, which would take it back to the levels in 2005. 

Or, he said, a combination of a 33 percent occupational tax hike and a cut of spending by 13 percent could close the projected $460,000 2010-2011 fiscal year budget shortfall.

Wantland is drafting an ordinance that would raise occupational tax rates from 1 to 1.5 percent and the proposed ordinance may be ready for council's consideration by its next regular meeting. 

Another proposed ordinance the council may consider would increase the city's share of the county's insurance premium tax from 3 to 4 percent. 

While the city wouldn't receive any additional insurance premium tax revenue until next year, the 1 percent raise would yield additional revenue. 



Per Brown's recommendation that the city have a sewer rate study done to determine how increases would be fair to all of the city's 4,300 sewer customers, the city is accepting proposals from three companies to perform a rate study. 

Pending the proposals are accepted before the next council meeting, the council may accept a company then. 

Brown recommended sewer rates be raised by 74 percent, but depending on the results of a rate study, that may not be the case.

It was suggested the city could get additional revenue from raising the gross profit tax rate on large businesses, but council members are concerned that may hinder economic development in the city and the county. 

Mayor Scott Ellis said increasing the gross profit tax would not affect small businesses, however Wantland said it may discourage businesses from locating to the city, mentioning how Hillview lost Walmart to Louisville as an example. 

City clerk Tammy Richmond said the city was looking into how Hillview's gross profit tax rate has affected business and just if it drove business away. 

What's more, council members were uncertain how much revenue could be generated from a gross profit tax increase or how long it would take to receive the funds.

Councilman Don Cundiff asked if the city could work on tracking down delinquent property taxes. Richmond said she would run a list showing all past due property taxes.

Richmond said she sent notices out about a month ago and the city has collected some of that revenue, but she doesn't expect significant to be generated from delinquent taxes.  

Wantland said there was an eight year statute of limitation on collected past due taxes and Richmond said most of the city's delinquent taxes were within that timeframe. 

Raising property tax rates by the 4 percent compensating rate was also discussed, however, council members took no action, concerned a property tax increase would negatively affect the people who could least afford it.

Faced with the choice of cutting spending or cutting service, Councilman Larry Hatfield suggested the city see how $1.6 million in cuts from the general fund budget would look on paper, "to show the magnitude of services cut if we did nothing."  

At this point the council is focusing more on slashing benefits than personnel and Hatfield asked Shepherdsville Police Chief Dan Patchin to put together a proposal showing how much money could be saved if family members were removed from police insurance. 

Councilwoman Bonnie Enlow suggested reexamining pay rates for all city employees because some employees were making more than city ordinance allowed. 

Wantland said the past administration was paying at least 10 employees more than the 2006 ordinance outlining pay grades permitted.

Hatfield also said the council should consider revising council pay before the 2012 election.

There's also the idea of liquidating city assets. 

"I don't think it's fair to tax payers not to look at every option," Hatfield said. "We're going to get run out of the city if we don't consider liquidating our assets."

It was suggested city government move back to their old facilities on Frank E. Simon Avenue and look into selling the government center. 

Councilman Alan Wetzel expressed skepticism at the notion, pointing out that the city didn't own the government center, adding that renovating the former city facilities would be costly and time consuming, but they could look into it.

The city is in the process of getting appraisals on the government center, the former city hall, police department, Shepherdsville fire station 2, the community center and public works building per the council's request.