Governmental agencies agree on tax revenue sharing that will fund important economic development efforts in the community
SOMERSET, KENTUCKY (June 28, 2021) — Somerset City Council members gave unanimous approval today to multiple interlocal agreements with Pulaski County Fiscal Court that will fund joint economic development efforts and provide essential services.
In what has been the most collaborative effort on these agreements to date between the two governmental agencies, the city and county have accepted provisions on sharing occupational tax and insurance premium tax revenue, American Recovery Plan (ARP) funds and fire protection services, as well as creating a tax increment financing (TIF) district to support the Horse Soldier Bourbon distillery project. Pulaski County Fiscal Court passed their version of the agreements in regular session June 22.
All of the agreements will remain in effect for 10 years.
“Collaboration and compromise are not always easy but looking through a broad community lens while maintaining a Somerset-first focus has led to historic achievements today,” Somerset Mayor Alan Keck said. “Because of these agreements, our economic development efforts will succeed, and each local government not only benefits today but has security for the future.”
The insurance premium tax agreement establishes that the city will remit to the county 2.5 percent of all insurance premium taxes it collects on properties annexed into the city after Jan. 1, 2020. The county currently collects 5.5 percent in insurance premium taxes, while the city collects 6 percent.
The fire protection services agreement maintains the county’s relationship with Somerset Fire Department in providing fire protection to specific areas in the county. Pulaski County Fiscal Court agrees to pay the City of Somerset $75,000 annually for those shared services.
In the occupational tax agreement, Pulaski County Fiscal Court will maintain a 1 percent occupational tax for all people who work in Pulaski County, of which the City of Somerset receives 0.2 percent. The city will continue to collect an additional 0.4 percent occupational tax for employees who work within the city limits. The agreement includes provisions for the following projects:
• $400,000 annually for operation of the Somerset-Pulaski Economic Development Authority (SPEDA). This allocation will increase to $620,000 annually in the year 2025.
• $400,000 annually in ARP funds for the next three years to SPEDA to be used within ARP guidelines. This funding, issued to counties this year by the federal government, is to be used help local economies recover from the COVID-19 pandemic.
• The Ky. 80 and Ky. 461 road project, funded in part by a $25 million Better Utilizing Investments to Leverage Development (BUILD) federal transportation grant. The county agrees to make the annual BUILD grant bond payment of $386,000 for the life of the grant.
Also in the occupational tax agreement, both governmental agencies agree to participate in a TIF district for Horse Soldier Farms, the community’s first bourbon distillery. This will be the third TIF district created by Somerset City Council — council members voted to create two others in downtown Somerset and on U.S. 27 late last year. Council members voted unanimously to create the Horse Soldier TIF district after passing the interlocal agreements.
TIF districts help local governments spur development by earmarking future property tax gains from a development to pay for the current cost of infrastructure improvements. TIF districts do not raise taxes in their designated areas.
Keck said while TIFs are new to Somerset, they are important tools for providing growth and opportunity that have been used for decades in communities across Kentucky. The Horse Soldier Farms TIF will allow the project to grow dramatically in size, both in total spending and number of jobs created, he said.
“Bold leadership and innovative thinking continue to move Somerset and Pulaski County forward,” Keck said. “Conventional wisdom, old practices and public bickering kept our community behind the curve. But in the spirit of cooperation, we’ve passed a new TIF and multiple interlocal agreements that will put Somerset and Pulaski County on the fast track toward growth and prosperity.”
Keck said the agreements passed today are crucial in continuing the movement to provide an unmatched quality of life and place in Somerset and Pulaski County.
“I’m incredibly proud of the work the city council, the judge’s office and fiscal court have put into this, continuing to put community over self and finding ways to strategically work together,” Keck said.