INDEPENDENCE — Kenton County Fiscal Court passed a $106.7 million budget Tuesday for the fiscal year that begins July 1, even though some of the money for a proposed jail and other agencies might not be available.

        The court also authorized an appeal to the state Supreme Court of a ruling by Kenton Circuit Judge Patricia Summe last Friday that essentially struck down much of an increase in the county payroll tax cap.

        The increase, much of which was negated by the ruling, would have raised some $7 million a year for the jail.

        Judge-executive Dick Murgatroyd said beyond the jail, the county's contributions to the Transit Authority of Northern Kentucky (TANK) and several social-service agencies could be affected if the county is not able to convince the high court to overturn Judge Summe's decision.

        Mr. Murgatroyd vowed the county would continue services regardless of what happens.

        “Those funds are not going to stop,” Mr. Murgatroyd said. “It just won't be as much as we had hoped. The county remains fiscally strong.”

        County Treasurer Ivan Frye said a report on how county contributions to TANK and the agencies might decrease if Judge Summe's ruling stands would be completed within two weeks.

        In addition, the county is keeping taxes already collected in an escrow account until legal proceedings are finished.

        Mark Guilfoyle, a Crestview Hills attorney representing SECO Electric and the Greater Cincinnati Construction and Building Trades Council, which joined in the lawsuit filed by the city of Covington and Corporex Cos. against the tax, called the escrow account an example of “backwards” thinking on the county's part.

        “It would make more sense to give the people's money back,” Mr. Guilfoyle said.

        “There's absolutely no precedent for an escrow account to hold the people's money while (fiscal court is) appealing a lawsuit. Will people be paid interest?”

        Covington Mayor Butch Callery had argued the cap — which raised some workers' tax burden 220 percent — would hinder Covington's economic development efforts.

        Whether Covington workers and businesses could offset their county payroll tax increase through a credit for taxes paid to Covington was the main issue in the judge's ruling.

        Covington and Corporex said state law allows the credit, while county officials said it does not.

        Judge Summe's ruling sided with the city. She said state law allows counties of more than 30,000 people — such as Kenton County — to impose payroll taxes of up to 1 percent.

        But Judge Summe wrote if a county chose to levy payroll taxes on or after July 15, 1986, anyone who paid an “occupational-license fee” to a city within that county would be entitled to a credit on their city license fee against the county payroll tax.

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