PRESTONSBURG — City council members were shocked Monday night by an auditor’s assertion that as many as half of the businesses in the city are not paying occupational tax.
The next day, however, city treasurer Yvette Latta said the claim was exaggerated.
David Garrett, of Jones, Pack and Associates, appeared before the council to go over his firm’s audit of city finances. During his review, he said said one item that most troubled him was his determination that a number of businesses are simply ignoring the city’s occupational tax.
Garrett said he drove along North and South Lake Drive and wrote down the names of 40 businesses, then compared that list to the city’s occupational tax records. Of the 40 businesses he listed, he said 19 of them were not paying the tax.
That revelation left council members stunned and angry.
Council member B.D. Nunnery said he wanted answers from Mayor Jerry Fannin about what the city is doing to address the number of nonpaying businesses, as well as other deficiencies listed in the audit. Other council members voiced their intention to revisit enforcement provisions in the city’s tax ordinance, to see what can be done and what changes need to made to make the penalties for not paying tougher.
However, Latta said she asked Garrett for the list of delinquent businesses. When she began checking tax records, however, she said only two of the 19 businesses on the list were actually ignoring the law.
Latta said Tuesday that many of the businesses were simply paying under a different name than what is listed on the business sign. In other instances, some of the businesses were late on a payment but were otherwise in compliance.
“I’m not saying there aren’t people out there not paying, but based on his sample, it’s not that bad,” Latta said. “There isn’t $2 million out there.”
Garrett also pointed out while the city had a $30,000 surplus in its general fund last year, it spent $250,000 more than it brought in on special project funds.
That disclosure created a ripple of surprise through the council, but Latta quickly explained that the additional $250,000 that was spent came from previous-year surpluses. Much of the money was spent on paving city streets and fixing sidewalks.
Council members did agree, however, that they need to keep a closer eye on special project fund budgets. Up until now, the council has approved the city’s general fund budget but has not exercised any oversight of many of the other funds.