Saturday, October 26, 2002

Kenton payroll tax increase ruled legal by state court

By Patrick Crowley
The Cincinnati Enquirer

COVINGTON - With unusual speed, the Kentucky Court of Appeals ruled Friday that Kenton County did not break the law when it raised its payroll tax two years ago for a new jail.

The case was expected to take several months. But in a quick 3-0 unanimous vote just two weeks after it began considering the case, the court overturned a ruling by Kenton Circuit Judge Patricia Summe. Judge Summe had ruled that the increase on the payroll tax cap originally passed by the Kenton Fiscal Court was illegal.

"It's remarkable, nobody expected it to happen this quickly," said Kenton County Attorney Garry Edmondson. "I thought certainly (it would take) months for it to be decided. It tells a lawyer that the law was very clear and the judges didn't have a problem and the case didn't require a lot of research."

Judge Summe could not be reached to comment Friday.

OK to collect, county waits

The immediate implications of the ruling are unclear. But the way is clear for the payroll tax cap increase - bringing a 220 percent increase for some employees - to again come out of paychecks.

The county could immediately begin collecting the tax, which would require workers and businesses in Kenton County "to pay substantially more in taxes than they paid previously," according to the appeals court ruling.

But Kenton County Judge-executive Dick Murgatroyd suggested in a statement Friday the fiscal court would wait for an anticipated appeal before deciding if the tax will be collected.

Kenton County filed its appeal in June 2001 after Judge Summe threw the increase out of court. The county had already begun collecting the tax and had to refund virtually all it had collected.

"Now it is time for us to step back and await a decision on an appeal by the plaintiffs and evaluate our long-term options," Mr. Murgatroyd said.

Implications in judge race

Meanwhile, the ruling adds a new twist to what is the most contentious political race in Kenton County, the Nov. 5 election between Mr. Murgatroyd - a first-term incumbent - and Patrick Hughes, a lawyer and Fort Wright Democrat making his first run for public office.

Both sides claimed victory with Friday's ruling.

"From a public policy standpoint, I am obviously pleased the Court of Appeals has today upheld the principle and recognized importance of local control and home rule," Mr. Murgatroyd said. "I have defended local autonomy.''

Mr. Hughes and the Democrats, who have built much of their year-long campaign on Mr. Murgatroyd's support of raising the tax, said the ruling allows Republicans to continue to push for higher taxes in Kenton County.

He cited the ruling in which Judge William Knoft, writing for the three-judge panel, said the taxpayers' "sole remedy" to any increase "is to seek relief through the political process."

"I could not agree more that taxpayers' real remedy here is to go to the polls on Nov. 5 and make their voices heard," Mr. Hughes said.

Mr. Hughes has maintained he can build the jail without raising taxes by cutting county government waste - including expensive SUVs and travel for county employees - and selling county-owned real estate.

"The decision only magnifies the difference between Dick Murgatroyd and me," he said. "I have a real plan to build the new jail without raising taxes. Dick Murgatroyd is completely committed to raising taxes to build the new jail."

Mr. Murgatroyd called Mr. Hughes' jail plan "misguided" because it guts money from the budget for other services such as roads, police and technology.

"I have gone through five campaigns and never have I seen such distortions, deception and demagoguery from an opponent," Mr. Murgatroyd said.

Democratic strategist Mark Guilfoyle, who works in the same law firm as Mr. Hughes, criticized Mr. Murgatroyd for not saying whether the fiscal court will raise taxes if the Court of Appeals ruling is upheld on appeal.

"Dick Murgatroyd filed this appeal for one reason and one reason only, and that's to raise taxes," Mr. Guilfoyle said.

Kenton County Commissioner Adam Koenig said it is prudent for the fiscal court to wait because the case is likely to be appealed. After Judge Summe ruled the increase illegal, the fiscal court refunded an estimated $4.3 million.

The Associated Press contributed.


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