The Covington City Commission decided Tuesday it was better to approve a property tax increase than cut services.
Proponents of the hike, which passed 4-1, said it was needed to help offset rising city expenses, particularly pension costs, which are going up by $931,000 this year, and health care.
The city’s property tax rate will increase from $2.842 to $2.924 per $1,000 of assessed value. That will boost the tax on a $100,000 home to $292.40, an increase of $8.20.
It is the first time since 1975 that the commission has increased the city property tax rate.
“I think that is reasonable in order to avoid staff cuts and cuts to city services,” said Jerry Bamberger, one of four on the commission who voted for the increase. “Hopefully, down the road when we aren’t in such a tough spot we can look at lowering the rate.”
Commissioner Steve Megerle, the only dissenter on the increase, said it was not right to increase taxes on residents while the commission offered tax moratoriums to several businesses over the past year.
“I just don’t see how that is fair,” Megerle said. “How can you justify cutting taxes for businesses and then turn around and increase taxes on your residents?”
He cited tax breaks the city gave the Pulse condo development, the Avenue jazz and blues club and the architectural firm of Kinzelman Kline Gossman to locate in Covington.
The new rate is expected to generate about $5.858 million for the city, a little more than $200,000 more than last year, said Covington Finance Director Bob Due.
He said the new rate would help the city meet its five-year revenue goals. The city, though, is still operating at a deficit and will have to find more revenue or cut spending in the future, Due said.
Supporters of the increase said most Northern Kentucky cities have been taking 4 percent revenue increases on their property tax rates for years.
State law limits revenue increases from property taxes to 4 percent a year without subjecting them to voter recall.
“I’m not a big fan of real estate taxes,” said Commissioner Jerry Stricker. “I prefer taxes that are weighted toward people that can afford it. In this case, though, I’m going to approve it because I think the increase is needed, and it is relatively small.”
Megerle said just because other cities have taken the increase doesn’t mean that Covington should.
“We have a lot of elderly and fixed income people in our city,” Megerle said. “I think people in suburban cities like Edgewood and Fort Wright can handle the increase a little bit easier than a lot of the people that live in our city.”
Commissioner Sherry Carran said without the increase, it would have been impossible to come to terms on labor contracts with the city’s three labor unions.
The city reached agreements with all three unions over the past year.
“I was really happy to see those get done,” Carran said. “I don’t know if we could have made those feasible without this increase.”
New tax bills will be mailed Sept. 1.
By Luke E. Saladin, kypost.com