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After months of discussion, public outcry and heated debate, the La Grange city council voted 6-1 in favor to impose a compensation tax for the city.
Council voted down a similar measure last month, but, claiming this was the only way to raise money to pay off the city’s massive debt, Mayor Bill Lammlein reintroduced the tax for a first reading during a special meeting last week. That allowed council to hold the second reading Monday.
The debt was incurred in 2005, when the city and Oldham County purchased land for the Oldham Business Park in a joint venture under the Oldham-La Grange Development Authority. So far, the park is empty except for the Rawlings Corp., a company that processes and recovers claims for health insurance companies.
While the county has managed to consistently pay its half of the bonds used to buy the property, La Grange has only been able to pay interest on the bonds. The city still owes $8 million on the principal, which equals $700,000 per year, Lammlein said.
Effective Oct. 1, the city will tax 1 percent of wages earned by anyone employed within city limits. The money collected from the tax will be earmarked specifically for paying off the debt. There is a sunset clause that will eliminate the tax once the debt is paid in full.
When the tax plan was voted down in July, Moody’s Investors downgraded La Grange to BA2 credit rating, meaning the city is listed as a serious investment risk, meaning it will be difficult to borrow money, if needed. The city will also pay a higher interest rate on any money borrowed.
Lammlein said that if the tax had not been passed and no other steps were taken to try and pay down the debt, the city could have defaulted on the bonds in 2015.
Council member Lee Phillips cast the lone dissenting vote, stating that it isn’t fair to put this burden on the people.
Council member Jason Taylor, a staunch opponent of the tax, was unable to attend the meeting because of a family trip. In an interview Friday, Taylor said he was unable to reschedule the trip after finding out the tax was going to be reintroduced.
During the July 29 special meeting, Taylor moved to table the ordinance for a week so he could attend the second reading. That would have pushed the decision back to council’s September meeting. His motion was denied.
“I am extremely disappointed in the council’s decision to implement an occupational tax,” Taylor said Tuesday.
State statute allows council members to attend meetings via video conferencing and in an e-mail last week Taylor requested Lammlein allow him to do so. In a reply e-mail, however, Lammlein said there wasn’t enough time to set up the equipment and seemed concerned about the cost.
“I was out of town for this meeting and would have voted no,” Taylor said. He said he believes Lammlein’s decision not to allow Taylor to participate long-distance “was an attempt to silence one of the voices against the tax.”
Attempts to reach Lammlein for a comment on Taylor’s accusation were unsuccessful by press time.
tax is unfair
Many La Grange residents turned out to protest the tax, saying it is unfair to burden those employed within city limits with paying off the debt resulting from a mistake they feel the city made.
Terry Green, who works in the city, said he would have no problem paying a tax for public projects, such as new roads, but doesn’t think he should be paying for something he had no say in originally.
“I didn’t have a choice,” Green said. “I’m just the guy paying for it.”
The discussion got so heated that, at one point, police had to escort an audience member out after he declared Lammlein needed a swastika. The man made the comment after Lammlein told him to stop interrupting a speaker.
Most of the council members agreed they had to do something about the debt and seemed to agree the tax is the best option.
Council member Tom Goldsmith said he tried to find a way to sell the city’s portion of the Oldham business park.
But, Goldsmith explained, the council doesn’t have the authority to sell the property on its own, but has to work with the county and OLDA..
Council member Jean Knight, who voted against the tax in July, changed her vote.
“Nobody wants to do this tax,” she said. “But we have to.”
Melanie Woosley, who also had voted against the tax in July, said she wants people to understand this was a hard decision to make.
“We’re up here trying to move forward in a positive direction and it does take some tough decisions,” she said.
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