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A controversial wage tax for workers in La Grange has been shelved once again.
La Grange City Council members voted 5-3 Monday to postpone a vote on a proposed occupational tax ordinance.
The delay forced council members to rethink the city’s proposed budget for 2013-14. The council rejected it by a 6-2 vote.
The occupational tax had garnered much attention since it was proposed May 6.
More than 100 people showed up for the meeting, most of them outwardly opposed to the tax.
During a public hearing, 15 individuals spoke to the ordinance. Ten argued against the tax, while only two La Grange residents supported it. Three people offered no opinion.
The overwhelming opposition to the tax prompted a contentious debate among the city council, as well.
Council member Lee Phillips ultimately suggested the tax vote be postponed and an alternative solution be explored.
“With so much outpouring, I think we owe it to [the public] to give it a little bit more thought,” he said.
Phillips’ motion required a majority vote to pass. He, Tom Goldsmith, Jean Knight, Jason Taylor and Melanie Woosley voted yes; Joe Davenport, Tad Humble and Debbie Pollard voted no.
At issue is a 1 percent occupational tax to pay the City of La Grange’s debt on the Oldham Reserve business park.
All wages paid by businesses within the city limits would be subject to the tax.
The city currently owes more than $10 million on a pair of bonds, only one of which the city has been able to make payments on, La Grange Mayor Bill Lammlein said.
In 2015, the debt will grow by another $1 million.
Lammlein said the new tax could bring in as much as $600,000 per year, money that will go to pay off the Oldham Reserve bonds.
Once the debt is paid off, the tax ordinance comes off the books.
At the start of Monday night’s meeting, Lammlein asked attendees to keep their comments to two minutes or less.
After one attendee argued the mayor was trying to limit free speech, the city council agreed to allow speakers as much time to talk as they wanted.
Many who spoke against the ordinance suggested the City of La Grange cut its expenditures before implementing a new tax.
“If I got into a bind by buying something, I would sacrifice things,” La Grange resident Dewey Wotring told council members. “I would not ask any of you to pay for it. … It’s my responsibility.”
Michelle Klein, who owns The Gathering Room Quilt Shoppe at 109 E. Washington St. in La Grange, said while she survived the recession, a 1 percent occupational tax might be too much to bear.
“This is probably going to kill me,” Klein said.
La Grange residents who support the tax said they do not want to see their property taxes increase.
If an occupational tax is not passed, Lammlein said city residents could see property taxes go up another 12 cents on every $100 of a property’s value.
Amid intense opposition and a divided council, Lammlein remained defiant in his push for the tax.
“I will do something about this debt before I leave office,” he said.
“If you don’t like me, I really don’t care, OK? I’m doing my job, and I’m doing what I told the voters who voted for me what I would do.”
With the tax ordinance tabled, some city council members felt they had little recourse but to reject the proposed 2013-14 budget. Only Davenport and Humble voted to accept it.
The City of La Grange’s fiscal year begins July 1, the same day as the council’s next regular meeting.
The council said it will hold special meetings between now and then to look at possible budget revisions.
Until a new budget is approved, the city will operate under its current budget.
Council member Taylor pointed out that several budgeted revenue items are underestimated in the 2013-14 draft.
Taylor suggested more than $426,000 of underestimated city revenue could be reallocated to pay down the Oldham Reserve debt.
If that happens, “you may not even need this [compensation] tax,” he said.
Taylor said he agrees with residents who believe the city should do some belt-tightening.
“I believe we should use this belt to tighten the purse strings of our city’s money,” he said. “I don’t believe we should use that belt to strangle the financial life out of our city’s employees.”
In 2005, La Grange and Oldham County governments invested $10 million in the 1,000-acre Oldham Reserve property.
To date, only one company has built on the property. The Rawlings Group, a health insurance subrogation company that employs more than 600 workers, established its headquarters there in 2007.
About 220 Kentucky cities and counties levy occupational and compensation taxes, ranging from 0.5 to 2 percent.
Lammlein said La Grange is one of the few cities of its size not to have a similar tax.
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