This section takes the City's financial information and tries to make it easier to understand. The City's Finance Department prides itself in its transparency; it has nothing to hide. But, even though it's transparent, it's not always easy to understand. The following summaries will provide the big picture in addition to links to entire documents.
Budget Document: The City's fiscal year ends June 30. Each spring, the City Department Directors meet with the City Manager to discuss funding needs and priority projects so that the annual budget can be compiled and approved by the Commission. The annual budget document serves several important functions. 1) It's a legal document through which the Commissioner carries out its legislative responsibility to control the City's finances. 2) It's a public education document to help taxpayers understand the City's finances. 3) It's a management tool that each City Department uses to plan, administer, and improve its operations and customer service. 4) It's an instrument for implementing the goals the Commission sets for the City. 5) It's an aid designed to help the Commission make difficult public policy choices. To view a copy of the current Budget and the budgets from the past few years, click City Budget.
Size of Paducah's Budget: So how big is the budget for the City of Paducah? That is not easy to answer since the City operates its finances through 20 different funds, and in some cases, money is transferred between funds. Just adding the budgets of all the funds together does not answer the question accurately because transfers of monies between funds cause the same dollar to be counted two or more times.
Funds that Operate Similar to Businesses: So how is the money divided? First, here's an explanation of some of the funds that operate on business principles. The Solid Waste Fund is the fund that the City uses to operate its garbage collection service and the compost facility. Its budget for expenditures for Fiscal Year 2018 is a little more than $6 million, and it's set up like a business. Most of the money for the fund is collected from the garbage service fees for residents and businesses. In other words, the money you pay for your trash pick-up goes into the solid waste fund. That also means money that the City generates from other sources such as the payroll tax does not go into the solid waste fund. The City has to charge enough for the trash collection to operate the garbage trucks, compost facility, etc.
There are other funds in the City such as Fleet Maintenance and the Fleet Lease Trust Fund that operate under business principles similar to the Solid Waste Fund. Revenue for the Fleet Funds is generated by the City making payments to itself for services and vehicles. That procedure sounds odd; however, it's basically a savings plan. The City has its own maintenance garage. When a City vehicle needs maintenance, the department responsible for the vehicle pays the maintenance garage. Each department puts maintenance and repair of vehicles into its own budget. The Fleet Lease Trust Fund is the fund that the City uses to replace vehicles. It's funded by the City making lease payments to itself. For example, after a new police car is purchased, the City calculates a lease payment by dividing the cost of the vehicle by its expected life. If a $20,000 police car is expected to last five years, the City would pay itself $4000 per year. It seems like the car is paid for twice. However, when the car is at the end of its lifespan, the City has money saved (with interest) to replace it.
General Fund: This is the City's largest fund. All City Departments that don't operate with an earmarked sources of revenue (such as the Solid Waste Fund explained above) are budgeted in the General Fund. Examples are the Police, Fire, and Engineering-Public Works Departments. The money (revenue) that goes into the general fund comes from several sources: Payroll Tax; Property Tax; Insurance Premium Tax; Business License; Other Licenses and Charges for Services; Grants; Rent, fines and Interest; and Fund Transfers. In preparing the budget, the City's Finance Department calculates a projection of anticipated revenue. For Fiscal Year 2018, the projected General Fund revenue is approximately $34.4 million. The City won't know until the end of the Fiscal Year the accuracy of the projected revenue.
General Fund Revenue: The table below shows the main sources of anticipated revenue in the General Fund for Fiscal Year 2018.
|Revenue Source||Amount||FY2018 Percentage|
|Payroll Tax Rebates (to County)||($315,500)||(1.0%)|
|Insurance Premium Tax||$4,150,000||12.1%|
|Other Licenses, Permits, Fees, and Charges for Services||$1,645,510||4.8%|
|Rent, Fines, and Interest||$619,375||1.8%|
|TOTAL REVENUE SOURCES||$34,403,310||100.0%|
Expenditures out of the General Fund: The largest expenditure category out of the General Fund is employee salaries and benefits which is approximately 70% of the FY2018 General Fund budget. The remaining percentages are divided among items such as contractual services, commodities, and matching funds for grants. The table below shows the percentage of expenditures by department.
|Expenditures by City Department||
|Engineering and Public Works Department||15.74|
|Parks and Recreation||9.79|
|Administration (General Gov.), Finance, and Human Resources||9.13|
|Planning and Information Technology||5.10|
The business license tax (also called the Occupational License Tax) is projected to generate approximately $4.5 million for Fiscal Year 2018. The funds are placed in the General Fund as described above in the section about the Annual Budget. The City of Paducah works on a gross receipts system. However, instead of charging one flat rate, the City places businesses into one of five categories with a rate based on profitability. The structure of the Paducah's Business License Tax is very unique and has been called a modified net profits system. Visit Occupational License Forms and Ordinances for more information. The table below lists the five rate classifications.
There are two basic systems for calculating business tax: gross receipts and net profit. More than 30 cities in Kentucky operate on a gross receipts system. The City of Paducah is unique with its five rates. The other cities in Kentucky operate with one rate. Some of the benefits and advantages of the City of Paducah's system include
Visit Business Tax Presentation for a slide presentation from the March 9, 2010 Commission Meeting. The presentation follows a year-long study of how businesses would be affected if the City of Paducah changes from its current gross receipts collection system to a net profits system.
The City Audit-CAFR is a report that is created at the end of a fiscal year. The City's fiscal year ends June 30. It takes months to compile, and the City typically doesn't receive the document until December or January. The independent audit is required; however, the CAFR is a voluntary document that the City submits for review to the Government Finance Officers Assocation of the United States and Canada. Paducah is one of only approximately 14 cities in Kentucky that compiles a CAFR for review and grading. Finance Director Jonathan Perkins says, the CAFR "is the seal of good housekeeping for financial reporting in government." The statistical section is one of the most interesting sections in the CAFR since it tracks ten years worth of data.
The City of Paducah levies a tax of 2.0% called the Occupational License Fee otherwise known as the Payroll Tax. It's a tax that is paid by people who work within the City of Paducah. In other words for every $1.00 that is earned, $0.02 is paid to the City of Paducah. The Payroll Tax is the largest revenue source for the City. The first 1.5% of the Payroll Tax is placed into the General Fund as described in the Annual Budget section. The remaining 0.5% is placed into the Investment Fund. The Investment Fund is dedicated to the following expenditures: economic development, neighborhood redevelopment, infrastructure capital investment, and property tax relief.
The anticipated revenue from the Payroll Tax for Fiscal Year 2018 for the General Fund is $15.725 million with the revenue for the Investment Fund equal to $5.2 million (a quarter of the total Payroll Tax collected which is nearly $21 million). For quarterly reports, project pictures, and summaries of the Investment Fund expenditures, visit Investment Fund Scorecard.
Revenue generated by the property tax is the second highest revenue source for the City of Paducah generating an anticipated $6.526 million for Fiscal Year 2018. However, the property tax rate has been reduced significantly since 1995. For example, on a house that had an assessed value of $50,000, a property owner would have been charged a rate of 0.438 in 1995 which would have been $219.00 to the City of Paducah. For that same assessment, the current rate is 0.255 which is $127.50 to the City of Paducah. In other words, for every $100 of assessed value of real estate, $0.255 (slightly more than a quarter) is paid to the City of Paducah.
Real estate bills are typically mailed in early November. The bill has three governmental bodies that receive revenue: City of Paducah, Paducah Junior College, and the City School District. The school district depends upon where you live in the City. Some people live in the City but are in the McCracken County School District. For more information about the property tax bill and how the bill is calculated, visit Property Tax Notice.