LA GRANGE, Ky. (WHAS11) — It’s a small town with a quiet charm, but La Grange has a big problem now; it's stuck on a freight train of debt that shows no signs of slowing down.
“Our credit rating was a big wake up call to a lot of people,” Mayor Bill Lammlein, said.
Moody's Investor Service downgraded the city's rating recently; making it even tougher to pay back the millions of dollars the city borrowed to purchase land for a business park in 2005. The city currently owes 10 million dollars on a pair of bonds.
“That figure probably won't work for us anymore; we're probably looking at closer to 12 or 13 million dollars,” Lammlein, said.
The 1000 acre property has just one tenant. Officials know this Oldham Reserve business park is both the problem and the solution. It's the source of the debt and it's the key to getting out of it. The city needs revenue and they need it now. Deciding how they're going to get it is the issue.
“We figure the compensation tax should bring in about 600,000 dollars a year. 2 weeks ago that was enough money to make payment on borrowed money to pay off the bonds. Since our credit rating has dropped I need another 100,000 dollars,” Lammlein, said.
With Mayor Bill Lammlein's proposed one percent wage tax, that means the city would need 700,000 dollars per year for the next 20 years to pay down the debt. Opponents of the tax say it hurts local business owners.
“It seems kind of counter intuitive that you want to bring business in then you do something that's so anti-business such as taxing employees,” Jason Kinser, owner of One Nineteen West Main, said.
The tax was voted down 4 to 3 in early July. Lammlein says it's the only way to generate continuous revenue into the city. He is determined to get the city out of the red.
“I'm not willing to give up what we have in La Grange. I'm not willing to give up our police dept. I'm not willing to give up our community center. I'm not willing to give up our parks,” Lammlein, said.
La Grange has until June of 2015 to pay the debt off or bankruptcy is a possibility. The mayor says the compensation tax will go up for a vote again in the near future.