PDS Council approves FY17 budget; okays “compensating” tax rate

PDS’ budget for Fiscal Year 2017 looks a lot like a number of its predecessors, holding the line on tax revenue. It’s also larger than a number of those that preceded it due to a growing workload and the revenue stream it produces. Those trends were highlighted for PDS Council members last month during the discussion that led to them approving it.

One elected representative from each of Kenton County’s 20 local governments makes up the PDS Council. These officials serve in a role defined by statute to “provide more effective representation of the various governmental units” participating in the organization’s operations. Among the group’s responsibilities is the review and approval of an annual budget and the tax rate that funds a majority of it.

According to Dennis Gordon, FAICP, PDS’ executive director, the organization’s new fiscal year budget “continues a trend the PDS Management Board set during the early years of the Great Recession.”

“Because a good deal of the services PDS provides is driven by the economy, our budget reflects to some extent the ups and downs of the regional economy,” asserted Gordon. “Our Fiscal Year 2007 budget for example was our largest as the recession took hold. All budgets since then have been smaller than 2007’s.”

The new fiscal year’s budget extends beyond the 2007 ceiling for the first time with fee revenue making the difference.

FY17’s budget is funded primarily through a “compensating tax rate” according to Gordon. A compensating rate is the rate that produces the same revenue as was produced by the previous year’s tax rate; the difference being the assessed valuation of the taxing unit. The bottom line of a compensating rate budget is theoretically the same as the previous year’s assuming no other source(s) of revenue.

Among the many trends Gordon illustrated for elected officials is the agency’s growing reliance on fee revenue, part of the PDS Management Board’s directive to staff almost ten years ago. Fee revenue is projected to bring in roughly $200,000 more during FY17 than it was projected to produce during FY16—with no increase in individual fees charged.

“This new fiscal year budget is only a little larger than the Fiscal Year 2007 budget,” said Gordon. “This represents a meager 5.2 percent budget increase over the past ten years—or put another way—an average annual increase of just one-half percent.”