cityhall1 300MADISONVILLE, Ky. (1/3/18) — The city of Madisonville anticipates a 49.33 percent increase in contributions pertaining to the County Employees Retirement System in the next fiscal year. The requirements from the state legislature remains unknown as the General Assembly convened Tuesday in Frankfort.

Berry Kington of Berry Kington and Utley, CPA presented the city’s fiscal year 2016-17 audit at a council meeting held Monday at city hall, saying the financial state of the city is “strong.”

Kington said the city has paid every nickel into CERS required including $3.22 million in fiscal year ending June 30, 2017, which was an increase of $342,675 compared to the year prior.

“The city is facing a massive 49.33 percent increase in contributions or $1,621,900 more in contributions beginning July 1, 2018,” Kington said. “Approximately $1,300,000 of the increase will have to come from the city’s general fund. You will be tasked with the difficult decisions regarding appropriate curtailments of employment, expenditures and necessary increases in tax revenue.”

The city could face offsetting retirement contribution costs via future layoffs or implementing a hiring freeze.

Council members said they would prefer the state implement the increases in increments instead of being slammed all at once. It all hinges on what the General Assembly decides over the coming weeks.

Kington explained if the Kentucky Legislature implements the CERS increase, many smaller cities like Providence and Dawson Springs face eliminating their police departments.

To offset the anticipated CERS contribution increase, Kington recommends the city consider increasing business license fees that have remained at $25 since 1973, and adopt a system where the minimum license fee billing method is replaced by an inflation adjusted minimum fee on the yearly net profits license fee filing.

Kington also questioned whether contractors awarded bids in the city paid occupational tax on its workers.

“Some contractors merely paid a $100 transient business license fee and did not remit required occupation taxes to the city,” Kington said. One of the companies identified as not paying the employee occupational license tax was Gridline Skateparks based in Seattle.

The current occupational tax is 1.5 percent of workers’ salaries if employed in the city of Madisonville.

The auditor also mentioned he received only 20 responses of 43 requests from city management and workers regarding fraud inquiries from fiscal year 2016-17.

“Four department heads failed to respond to our requests for information,” Kington said. “City management’s assistance is requested to emphasize the importance of responding to direct information requests from auditors.”

Kington said he did not identify any deficiencies in the city’s internal control related to material loss, however.

Doreen Dennis
SurfKY News

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