Over 60 McCracken County residents showed up Tuesday afternoon at the courthouse to weigh in on the fiscal court's decision to pursue an insurance premium tax.
The McCracken County Fiscal Court held the first reading of the ordinance during its Jan. 27 meeting, ultimately landing on the following rates: 6.9% on automobile insurance; 6.9% on life insurance (only the first year would be taxed); 4.9% on fire and allied perils (which includes home insurance); 4.9% on inland marine insurance; 4.9% on casualty insurance; and 4.9% on all other risk insurance.
The county's reasoning for the tax is the dire financial situation the current court has inherited, a combination of pension and health care upticks coupled with debt from projects and a lack of tax increases over time.
Judge-Executive Craig Clymer gave a short presentation at the start of the meeting detailing the dwindling of the county's reserve fund from nearly $9 million in 2011 to less than $1 million in October 2018.
Commissioner Eddie Jones filled in some blanks on the topic later on.
"Starting in 2011, McCracken County got aggressive with some debt and borrowed about $16.5 million in between 2011 and 2013," Jones explained. "At the same time you've got the increase in pension costs and, more significantly, is the cost of health care for McCracken County employees."
Projects at the time included the building of the Murray State University satellite campus in 2014 as well as providing incentives for TeleTech in 2012, and Whitehall Industries and Genova Products in 2014. Genova has since closed their Paducah operations.
Commissioner Bill Bartleman hopes the county can net $3 million from the tax.
"Even if we raise $3 million, you need to understand it won't wipe that board clean," Commissioner Jeff Parker said in reference to a white board laying out how the county reached its current financial state. "The $3 million is only a Band-Aid. Because of pension costs, in five years we're going to be at the $3 million mark in increases."
Parker would go on to explain that the county has tightened its belt plenty already, paring back positions over the last decade wherever it could.
"We were handed this. It's a mess and we've done everything we can to start to turn it around. We have to have that extra $3 million or it's going to come out of the budget and that's where it would cut into 911 and the sheriff's department. Those are the things that are next on the list if we don't act now and be responsible."
All 23 members of the public who stood before the court during the meeting were adamantly against the tax.
Some called for accountability for past fiscal court administrations.
"If it's gotten in this bad of a shape, those previous commissioners should be able to come forward and maybe give an explanation," said Charles Hamilton, a disabled Vietnam veteran. "You're going to reduce my income and put a load on me with no explanation on why I have to carry this load."
Others wondered how people -- especially single-income, Social Security-dependent or retiree households -- were going to be able to pay this tax.
"There are a lot of people in McCracken County who are already retired and have no hope of an increase in their income," added Mary King, a retired McCracken County nurse who rebuilt her home after the 2011 floods. "We sunk deeply into debt in order to rebuild our home, and I lost my husband two years later. I am already strapped as far as I can be."
A number of previous and current insurance professionals spoke out on the subject.
"This lack of funding is due to poor financial decisions and budget planning," said Matt Wilson, representing the McCracken County Farm Bureau. "The McCracken County Farm Bureau is concerned about the impact a tax increase would have on our members and county residents.
"We also have doubts that if the tax was approved we would never be able to eliminate the tax, even if there was no longer a deficit."
Scott Young, a locally-based commercial insurance salesman, asked the court to consider "back-end ramifications" of the tax during his time.
"My average size account is over $1 million in premiums, and I have some of those in McCracken County. They're looking at roughly between $120,000 and $150,000 premium tax," Young said. "The conversations I'm having with those gentlemen and ladies is not about the tax rate or what's fair or whether workman's comp is included, it's about what (they're) going to do."
Young believes that some of these businesses are considering declaring domicile in other counties or states, moving valuable jobs out of the area.
A few citizens proposed different pathways to revenue for the county through things like economic development or legalizing medicinal marijuana.
"Quit trying to hit a home run and start going for base hits," Randy Wiersma offered. "We don't have to have 300-employee businesses. We need 20-employee businesses. That will get your tax revenue back in shape."
Gerald McKinney proposed that the county's low taxes should be one of its most marketable assets.
"(Economic development) is tough for this area already," he said. "If the insurance premiums for a prospective business are already high and we're throwing another tax on top of that, that's not going to help us by any stretch of the imagination. The very best argument you have for economic development is our low taxes."
Many attendees called for increased transparency on the county's part, even lobbying for a vote on the issue. The rate was called into question by some who advocated for "starting low" with it because of the lack of a reliable revenue projection for the tax.
Jones believes that a 1% tax would generate somewhere between $300,000 (1% of Henderson County's insurance premium tax) and $750,000 (1% of Paducah's).
While some called for earmarking whatever potential revenue was collected for a specific need, Clymer assured the attendees that the county would use it only for basic county operations.
"This tax is not going to build sports facilities or soccer fields. Whatever we do here, we've got to have some revenue," he said. "We're not looking to do anything superfluous or frivolous. We're looking at just providing basic, strong county services that we need."
Toward the end, Clymer thanked the members of the public in attendance as well as the people who made the 68 calls fielded by his staff in relation to the tax over the past week, adding that "this is what local government is about."
The McCracken County Fiscal Court plans to welcome further public opinion before the second reading of the proposed ordinance at its Feb. 10 meeting, which will be held at 5 p.m. in the courthouse.