COVINGTON — Kenton County officials say they are “deeply disappointed” and will appeal directly to the Kentucky Supreme Court a judge's ruling that effectively negates most of a recent increase in the payroll tax cap.

        The increase was passed to help pay for a controversial, much-needed new jail.

        Except for issuing a brief written statement saying they planned to appeal, county leaders could not be reached for comment on the summary judgment issued Friday by Kenton Circuit Judge Patricia Summe.

        Judge Summe ruled that Covington taxpayers — workers and businesses — could offset their county payroll tax increase through a credit for taxes paid to the city of Covington.

        When the lawsuit against the county's increase was filed in January, Scott Kimmich, Kenton County deputy judge-executive, had said the county would proceed with plans to build a jail, regardless of the outcome of the payroll tax challenge.

        He said then that the county would have to consider cuts in as-yet-undetermined county services if Covington and Corporex Cos. prevailed in their lawsuit.

        Covington Mayor Butch Callery had argued the tax — which raised some workers' tax by 220 percent — would hurt Covington's economic development efforts. He called the ruling “a great victory for the city.” On Friday, Mr. Callery offered to help the county look for alternative funding sources.

        “As I had suggested earlier, the city would be willing to help the county put together a blue-ribbon committee of corporate leaders from the Northern Kentucky area to help the county examine how to avoid service cuts,” Mr. Callery said.

        On Friday, Sheryl Snyder, the Louisville lawyer hired to defend Kenton County in the payroll tax challenge, referred all questions on the ruling to Mr. Kimmich.

        “I am deeply disappointed by the ruling Kenton Circuit Judge Patricia Summe has issued this afternoon, and have grave concerns about the implication her ruling will have in Kenton County and perhaps across the state,” Kenton County Judge-executive Dick Murgatroyd said in a written statement.

        “While I certainly respect Judge Summe as an officer of the court, I strongly disagree with the opinion she has rendered, and on the advice of our special counsel, Sheryl Snyder, will seek the approval of fiscal court to file an immediate appeal of her decision to the Kentucky Supreme Court.”

        Mr. Murgatroyd and Mr. Kimmich could not be reached for comment on whether the county plans to continue collecting the tax during the appeal and place it in escrow.

        Crestview Hills lawyers Mark Guilfoyle and Patrick Hughes, who represented SECO Electric Inc. and the Greater Cincinnati Building and Construction Trades Council, which joined in the lawsuit, said the judge upheld what they had argued.

        “The message from the court is, "There's no discussion here,'” Mr. Hughes said. “The statute's clear. The credit applies. All (the county is) going to do by appealing is snub their nose at the taxpayers they've already snubbed once.”

        Mr. Guilfoyle called the county's decision to bypass the Court of Appeals and go straight to the Kentucky Supreme Court “highly irregular.”

        He also said Mr. Murgatroyd's statement that the judge's ruling could possibly have implications across the state was “nonsense.”

        “Kenton County is the only county that has raised taxes in this way,” Mr. Guilfoyle said. “And the fact that they're going straight to the Supreme Court tells me they're trying to fast-track this deal after they've taken one on the nose.”

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