Home » Lane One-on-One: Judge/Executives Want Frankfort to Pay Unfunded Pension Liability

Lane One-on-One: Judge/Executives Want Frankfort to Pay Unfunded Pension Liability

Kentucky County Judge/Executive Association President Melanie Roberts says counties need what revenue they have to maintain local services

By Mark Green

Melanie J. Roberts was elected Bullitt County judge/executive in 2006, took office in 2007 and is completing a third term.

Mark Green: What are the primary revenue streams for Kentucky counties and the typical proportions of those sources?

Melanie Roberts: Here in Bullitt County, we just have the property taxes; we do not have an occupation tax. But I don’t want to speak for Bullitt County only; I want to talk for judge/executives in the whole state. We do have the local government insurance premium tax here in Bullitt. Unfortunately, the cities are able – and they do – to take that revenue from the county. At this time, Bullitt County has no occupational tax; only property tax revenue.

Many counties do have the occupational tax, but another revenue source is the property taxes, and another is the insurance premium tax. The three largest sources of revenue for counties are the occupational license fee at 47 percent, real property at 22 percent and the insurance premium tax at 9 percent. Counties also count on fees from their citizens for 911 and collect franchise fees on garbage collection and landfill usage.

MG: Of the revenue streams counties use, are there any trends regarding which are going up and which are going down? Has the economy produced better property values and more revenue, or are things stable?

MR: Revenue streams are fairly steady across most of the commonwealth. However, coal field counties have lost significant coal severance monies the past few years and this has resulted in budget dilemmas for these counties.

MG: What government services are constituents most concerned with today? What are the things that you hear about the most?

MR: The electorate is most interested in safe roads and bridges, clean water supplies and efficient emergency services, meaning police, fire, ambulance and 911. If people aren’t safe, then we’ve got a problem. Of course, emergency services includes dispatch, since communication is absolutely critical when you’re calling for an ambulance or you need law enforcement. You’ve got to have those services. People definitely want those services, and when you need them you want good services.

Also, something that’s definitely really important locally in Bullitt County – and I don’t want to state that it’s widespread – are these “package” sewage plants (smaller prefabricated units serving areas not connected to central systems) that were developed quite some time ago. They are a major problem now.

MG: They’re at the end of their life cycles?

MR: Yes. We have a privately owned sewage plant in Hunters Hollow (the smallest of Bullitt County’s eight cities), and it collapsed due to being antiquated. Sad to say, raw sewage is running in people’s yards. That is absolutely unacceptable in this day and time. Unfortunately, nothing was done from the state level or the federal level, and our Bullitt County Sanitation District entity has had to take over that plant, and it’s just Band-Aiding it trying to keep it going. The county fiscal court has no direct power over this except for putting people on the three-person commission board, and then voting to allow that commission to raise rates.

MG: Sewage issues are on the rise across the state for county governments?

MR: These package plants are an issue that needs to be addressed; state and federal officials, along with local, and maybe a private entity, need to step up and do some planning to solve this problem. Maybe develop a regional sewage facility. Sanitary sewers are an issue in this county, in the north end specifically, and it’s an issue in other counties. I don’t know the extent, but it’s a problem I’m passionate about because that’s not good!

So, constituents want the best emergency services, including 911, and sewer, and of course, people want roads – roads and bridges. It is imperative that government, which has the people’s money, apply those taxes to have good, solid, efficient and effective infrastructure. Something now in this day and time people are asking for is good high-speed internet. That’s very important.

Let me say something else about infrastructure. We are very blessed here in Bullitt County because we have a partnership with the Louisville Water Co., but some counties are still looking for potable water – and that’s critical. Folks don’t want to be on wells anymore.

MG: What are the backgrounds of most Kentucky judge/executives? Is there a common background?

MR: No. It’s all across the board, very varied. Judge/executives come from every walk of life. A few were teachers; I’m one of them. A few were superintendents. There are principals, military folks, a few attorneys, bankers, several farmers, coal miners, police officers, funeral home directors and small-business owners. This variety of backgrounds is significant for our (Kentucky County Judge/Executive) Association. No matter the subject area, there are generally judge/executives with experience that is helpful when formulating or reviewing potential legislation.

MG: Is there a typical age?

MR: This varies considerably. The average age is around 60. Currently the youngest is 36 and the oldest is 88.

MG: What is the distribution between men and women?

MR: Judge/executive is very, very much of a male-oriented area. Currently there are only four women judge/executives. I believe this trend will dramatically change in the years ahead.

MG: What involvement in economic development do judge/executives typically have? Is there a “typical” participation in a business recruitment or expansion?

MR: Most of our judge/executives play a key role in economic development. They work closely with their local chambers of commerce and with the Kentucky Economic Development Cabinet, a very important agency, and state Workforce Development. Many judges serve as the local contact person with the state during business recruitment. Judge/executives work with those folks if they don’t have a county economic development agency like we have here in Bullitt County; we have an economic development agency that consists of folks from the business community. The judge/executive submits names to the fiscal court for appointments to the board seats.

MG: Does county government get involved in specific projects? If a prospect says they want certain services or incentives, does it fall to the county judge/executive to say yes or no?

MR: If there is an economic development director, he or she takes care of communication between the state government and prospects and oftentimes a city.

Ultimately the whole fiscal court generally gets involved. The judge may be dealing directly with the state on working with a client, but local incentives are usually determined by the fiscal court. It normally takes the combination of state and local incentives to get the job done.

MG: What would county governments or judge/executives, collectively, like to see happen with regard to addressing Kentucky unfunded pension liability?

MR: We very much want the state to take care of that problem, which was caused by the state, and please stop burdening the local governments with picking up the bill. I know that’s pretty harsh, but we here locally are serving the constituents, and we have got to be able to keep the funding that we have to provide those necessary services to our constituents. Counties would like to see the state vow to paying its part of the unfunded liability from now on as counties have historically done. Find a resource. Find a revenue stream. Vote on a revenue stream, or let the people decide on a revenue stream, if that’s what’s necessary to start solving that problem. A big reason for the huge unfunded liability at KERS (Kentucky Employees Retirement System) is the neglect of past administrations and legislatures. Because of this, there is a large amount of the state budget that will need to be devoted to paying this in order to protect the inviolable contract of retirees. Many of the dollars needed for this could have been returned for much-needed local government projects.

MG: Are the actions the state has taken so far regarding pension impacting county budgets significantly?

MR: Yes. The Kentucky Retirement Systems (KRS) Board of Trustees changed the CERS (County Employees Retirement System) assumption rates last year on payroll growth and the rate of return on investments. This increased the contribution rates dramatically for local governments. The General Assembly did pass HB 362 last session that allows for a phase-in of the contribution rates over a 10-year period. This will enable most local governments to at least plan for the increased pension costs instead of paying such high rates in year one.

MG: What are county government’s biggest concerns right now, collectively? Does anything keep you up at night?

MR: Pension funding. Are we going to have to pay a huge amount to the state to help fix that problem? I’ll tell you, the local elected officials will probably converge on Frankfort like the teachers did and be very, very adamant that “This can’t be happening.” You’ve got to fight for your people. You’ve got to fight for your constituents.

Also, the extreme costs of funding the incarceration of inmates is universally a big concern for fiscal courts. County governments are putting over $120 million from their general funds into their jail funds to support the costs of their jails. There needs to be criminal justice reform to reduce some of this burden. Fiscal courts also deal with a large number of mandates imposed on local governments – solid waste, animal control, cost of elections, etc. 

MG: At the height of the Great Recession, The Lane Report talked to local government officials for an article about what they were going to do to manage their budgets. And everybody was making a lot of cuts at that time. Now 10 years down the line, how have county government operations and structures changed, if any, as a result of the Great Recession and the operational cuts it imposed?

MR: The economy bouncing back as well as it has, has helped tremendously. I became judge/executive in 2007. County governments are still having to do more with less because of the state mandates of this, that and the other, and now the pension mandate. There really needs to be a turnaround on the state level and the federal level that those entities send more money back to the local government or just please don’t take it from the local government to begin with.

MG: Were there permanent impacts in terms of changes made then?

MR: Not to my knowledge, not here. And fortunately, we were doing pretty good here because of all our economic development here. We’ve rebounded.

MG: What services or functions do Kentucky county governments outsource to private business nowadays?

MR: One really big one implemented just when I became judge/executive was health services to inmates. A lot of counties contract that out. Some other counties outsource road maintenance. And some outsource solid waste collection and landfills.

MG: How do Kentucky county judge/executives view the economy presently? Is there a common view, or does that vary a lot by what part of the state you’re in?

MR: Across the commonwealth, most regions have witnessed some of the lowest unemployment rates in decades. This is great news but has made it difficult to find quality employees for new businesses and expansions. The coal fields, particularly in Eastern Kentucky, have suffered the loss of high-paying coal jobs. This has resulted in some migration from that region into other areas.

MG: What is the average tenure of a Kentucky judge/executive?

MR: Too short! Two terms would probably be average. Forty-eight of the judges elected in the last election in 2014 will not be returning to office in January – I’m one of them. Some of those decided to retire and some were defeated in the May primary. There are still many competitive races that exist. It is possible there may be a 50 percent turnover of judge/executives this election cycle. That’s a big turnover.

MG: Should counties have the authority and a mechanism to enact a local option sales tax?

MR: Anytime “the people” can decide for themselves what their desires are, I support it. So, yes. 38 or 39 states already have various local sales tax allowances. The local option sales tax that has been proposed in Kentucky is one of the most democratic processes I can imagine. As proposed, if a community desires a project, the local government can vote to have the question placed on the ballot and then the citizens can approve or reject the specific project.  The benefit is fairly obvious.  If the community desires a certain project that cannot be funded out of the local government budget, this option provides for that opportunity.

MG: Kentucky’s many counties, each with its own government operation, is not a financially efficient system. Consolidation of counties is not politically viable, but are there operations that counties do or might collaborate on to be more efficient in providing services?

MR: Well, first of all, I don’t think that fiscal courts are financially inefficient. Why? Because people elected the judge/executives and the magistrates of each county to spend the property taxes, or whatever revenue stream they have, to the best of their ability, and I have the utmost faith in democracy.

You are correct that consolidation of counties will probably never occur due to the unique history of each of our counties. Counties and cities do recognize the necessity to share funding to create effective, efficient services for our constituents. Most counties have interlocal agreements with cities and neighboring counties to provide services. The number of these interlocal agreements is almost endless. Counties share jails, industrial parks, animal control shelters, landfills, garbage collection, emergency services, etc., with their cities and neighboring counties.

MG: How much has the ongoing digital technology revolution affected operations, services and interaction with constituents in the past five or 10 years? What further developments can be expected?

MR: I mentioned earlier that high-speed internet is one of those services that people are expecting from their government. I know the want is out there; people want good internet service. Meanwhile, social media has become so very important in staying in touch. The ability to reach most every constituent immediately is amazing. This enables my office and staff to disseminate essential information to our citizens in a moment’s notice. The use of Facebook and Twitter have become common for most county governments. I do believe there is a need for broadband for all citizens of our commonwealth. I know there are some difficulties right now with getting these connections made but think this will be worked out in the near future. 

MG: Are county governments making use of or looking for public-private partnership deals for new or updated infrastructure or services?

MR: Local governments have been utilizing public-private partnerships for many years.  For example, private companies have built speculative buildings in local government industrial parks on numerous occasions. The enactment of HB 309 in the 2016 session provides for a formal way of achieving these important partnerships. I believe as time goes on, local governments will utilize these alternative methods for procuring, constructing and financing capital projects.

MG: Was there any other subject that you would like to discuss?

MR: On a business level or any level, the ability to just agree to disagree and try to be proactive instead of reactive. I know that’s not a specific point, but the folks who are in a community, whether it be in a business or government or private, whatever, you’ve got to be able to agree to disagree and sit down and be able to talk to people and try to work things out. I am seeing more and more, “If you don’t agree with me or don’t accept my thoughts and my ideas, I don’t want to work with you.” That is not how we’re going to make progress in our society.

So just getting along with each other and genuinely caring about the community in which you live, and having pride. Having pride in your community, in yourself. That’s something that I’d like to see more of.

Mark Green is executive editor of The Lane Report. He can be reached at [email protected]