• 401 Frederica Street, B-203
• Owensboro, Kentucky 42301
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Big Dreams, Big Decisions :

A citizen guide to prioritizing proposed community projects

by Rodney Berry

What is the capacity of Local Government to Finance these Projects?

Both city and county government are fiscally sound, with a moderate amount of debt and a small percentage of annual revenues applied to debt service. Reserves are relatively low, however, and both governments propose cuts in departmental and agency allocations for 2005-06.

Faced with increased obligations (e.g., city pension plan, county jail), both governments are cautious to assume major community projects without leveraging local funds with federal and state grants, bonds, private funds, tax increment financing, hotel-motel tax, and other sources.

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City of Owensboro Daviess County Reserves $1.6 million $4.0 million Annual Budget 51.8 million 55.7 million Est. 2004-05 Balance (Deficit) 1.6 million (1.0 million) Restricted Funds (2004-05)     Capital Construction 3.7 million* none Wellness Initiative (ODCH Funds) 3.3 million 3.9 million Less Commitments -3.7 million** -1.8 million Uncommitted Funds 3.3 million 2.1 million Loans     Legal Debt Limit 220.8 million 72.0 million Total Current Debt 21.8 million 17.7 million Annual Debt Service 2.3 million 1.3 million Percent of Budget for Debt Service 4 percent 3 percent Notes: *.3 percent of the City’s 1.3 percent occupational and net profits tax is restricted to capital projects. **Funds earmarked in 2005-06 for drainage, parks, public safety, sidewalks, and transportation Grant opportunities are monitored by staff and applications are submitted when promising. These include federal transportation, HUD Community Development, State Renaissance, and other areas. Legislators have been successful on occasion attracting grants for special projects (e.g., U.S. Senator Mitch McConnell secured grants for riverfront improvements). Private sector support has been key for many community projects: RiverPark Center, Owensboro Museum of Fine Art, BB&T Plaza, and more.

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Comparison of Competitor Cities   Owensboro Bowling Green Population (2000 Census) 54,067 49,296 Occupational Tax 1.3 percent 2.0 percent 3.5 percent* Annual revenue from occupational, net profits, and insurance tax $13.7 million $27 million Hotel-Motel tax (to county government) 5 percent 4 percent No. of hotel rooms 1500 2500 City employees 442 610 General Fund Balance $1.6 million $14.3 million Debt $21.8 million $93.9 million *for employees in Bowling Green’s new industrial park Note: City of Owensboro Finance Director J.T. Fulkerson, Daviess County Finance Director Tony Sook, RiverPark Center CEO Zev Buffman, Deputy County Administrator Steve Johnson, City Facilities Manager Tony Cecil, and Messenger-Inquirer business reporter Keith Lawrence were helpful in assembling information on these community projects.

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How much revenue would come from a… 1 percent increase in the City Occupational and Net Profits Tax: $10 million/year…which could finance $145 million in projects 1 percent increase in the County Occupational and Net Profits Tax: $5.5 million/year…which could finance $80 million in projects 1 percent increase in the City’s Insurance Premium License Fee: $800,000/year…which could finance $10.5 million in projects 1 percent increase in the hotel-motel tax: $ 130,000/year…which could finance a $1.7 million project 1 percent restaurant tax (currently not allowed in second-class cities): $1.2 million/year…which could finance $15.7 million in projects

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