oldham reserve pic

The controversial “compensation tax” on workers within La Grange city limits could be extended indefinitely, with added scope for use of that revenue.

The existing one-percent tax on wages passed by La Grange City Council in Aug. 2013, limited use of collected revenue to paying off millions in debt service to the Oldham Reserve business park.

An amended ordinance introduced at the November city council meeting not only removes language that would otherwise retire the compensation tax, it allocates one half of those collected funds from businesses and organizations within Oldham Reserve boundaries to fiscal court, while setting aside more of that revenue to sundry infrastructure, public works and economic development projects in the city.

The Nov. 7 meeting marked only the first reading of the amended ordinance. Its second reading and a public hearing will occur during the Dec. 5 city council meeting held 6:30 p.m. at City Hall.

Outlined use of the compensation tax under the existing ordinance reads:

“All money derived from the compensation taxes under the provisions of this ordinance shall be paid to the city and placed to the credit of the city’s general revenue fund; however, all funds collected as compensation tax shall be used only to retire debt related to the Oldham Reserve Property.”

The final section of the existing ordinance also outlines a termination date for the compensation tax, reading that it shall cease to be effective “after the debt related to the Oldham Reserve Property is paid in full.”

The amended ordinance, under “uses,” revises the language to read: “One half of all funds collected as a compensation tax from businesses and organizations located or doing within the boundaries of the Oldham reserve property shall be paid to the Oldham County Fiscal Court in accordance with the Inter-local Cooperation Agreement.”

It also adds two new subsections, the first of which would allocate a minimum of 20% net compensation taxes received by the city to be set aside in a reserve account for “future infrastructure, utility, public works and other economic development obligations…”

The next added subsection would allocate the remainder of all funds collected through the compensation tax to: “…promoting economic development within the boundaries of the city, creating job opportunities for [La Grange] citizens, and accomplishing public projects, including completion of the Oldham Reserve infrastructure and utilities reasonably necessary for economic development and growth…”

That subsection goes on to also list public works and capital projects to “maintain, repair and improve” city streets, sidewalks, transportation, parking, drainage, internet access, other public facilities, public parks, recreation activities and public safety.

Even in its original form to pay off Oldham Reserve debt, the compensation tax met significant pushback from residents when then-Mayor Bill Lammlein introduced the ordinance in Aug. 2013.

Those residents called the tax a strain on working people, particularly in lower income brackets.

Lammlein argued at the time that the city needed the compensation tax to dig itself out of financial straits.

In a follow-up interview Monday, Lammlein, recently re-elected to La Grange City Council, gave a similar argument about the amended ordinance to the tax.

“It’s been about 10 years since we passed that comp tax and things have obviously changed,” he said. “We need two more police officers which we can’t afford with the budget we have. There are a lot of things this city needs to do to stay viable…I’ve gotta pay it, you’ve gotta pay it. All God’s people have to pay it.”

On the topic of how the tax impacts the average worker, particularly those making minimum wage, Lammlein argued that maintaining the tax could create jobs with higher pay.

“Hopefully we can get some bigger businesses [so] the guy that’s making minimum wage can get a better job,” he said.

When asked how much the city still owes on that original Oldham Reserve debt service, Lammlein deferred to current Mayor John Black.

The original debt for Oldham Reserve circa 2013 totaled $8 million.

Today, only $225,000 remains according to La Grange Mayor John Black.

“It comes down to paying it off in December of this year at a cost of $225,000,” Black said. “I can take that same amount and roll it into another year if I choose to, but it’s still going to cost one-percent for another 13 months if we do it that way.”

To the question of whether the city could simply pay off the remaining debt with American Rescue Plan Act (ARPA) funds, Black said federal guidelines prohibit that.

“You can’t pay off lingering debt or any civil judgments in court [with ARPA funds],” he said.

Despite years of payments to that Oldham Reserve debt, Black said the park lacks the infrastructure to accommodate businesses that could come knocking.

“With probably 75% of the park, [we] have to say we’re not job-site ready [to prospective businesses],” he said. “Go to Shelbyville, Bardstown—they are ready. We have to make this place job site ready from the perspective of the Kentucky Cabinet for Economic Development.”

Accomplishing that goal, however, could cost millions—and time.

“Estimates to put sewers [in Oldham Reserve] are 10 million bucks to split between the city and county,” he said. [Between that, electric and extension of gas] there was a guy that estimated to put all these utilities in would be $20-25 million.”

Black, in conversations with Scott Treece, Director of the La Grange Utility Commission, also learned that moving forward with a sewer plan in Oldham Reserve would take more than a year to bid out and at least two years to build.

Treece, Black said, does not want to proceed with such plans without a concrete funding mechanism.

“He’s not going forward until he hears a commitment from the city, the OLDHA board and the county,” Black said.

Pushback

Just as the compensation tax garnered opposition upon its introduction and ultimate passage in 2013, plans to amend it drew anger from some local businesses, residents and city representatives.

The upcoming December La Grange City Council meeting marks a full circle moment for Councilor Jason Taylor, who sat on the council in 2013 when Bill Lammlein served as mayor.

Taylor, who opposed the compensation tax then and opposes the amended ordinance now, did not mince words about Lammlein and Mayor John Black.

“They want this tax to go on so they can spend money on whatever,” he said. “There’s other ways of creating a tax [where] citizens could hold them accountable. They want to slide [this] in by taking language out and sliding it under the radar…they are going back on their word and it’s up to the voters and people voting on this.”

Taylor also called the compensation tax an economic detriment to the community.

“This is hurting our economy, truthfully,” he said. “A lot of this is going to [hurt] waiters, waitresses, gas station workers. My son works at a gas station—a lot of teenagers don’t make a lot of money starting out. I just think it’s wrong. This is a turnoff to businesses. They should be looking at tax incentives to bring in businesses.”

Oldham County GOP Chair Blaine Anderson, meanwhile, started an online petition in opposition to the amended ordinance, which as of Monday morning garnered 114 signatures.

“At the Dec. 5 meeting of City Council, current city councilor Lammlein with the support of Mayor Black and other city council members is proposing to make this tax permanent,” the petition reads. “The tax will no longer ‘sunset.’ They want to allow the tax to be used for basically whatever they deem as necessary. With the bond soon to be paid off, we do not need this tax to be extended.”