The Owensboro City Commission will hold first reading Tuesday, May 21, on a proposal to annex six Daviess County Public Schools and several DCPS facilities into the city limits.

City commissioners will hear the proposal at their 5 p.m meeting at City Hall.

Matt Robbins, superintendent of Daviess County Public Schools, said the six schools include Apollo High School, Daviess County High School, Burns Middle School, Burns Elementary School and Highland Elementary, as well as the site of the new Daviess County Middle School near Gateway Commons off Kentucky 54.

Other properties in the proposal are the DCPS central offices on Southeastern Parkway, and a maintenance and bus facility near Burns Middle School.

Owensboro City Manager Nate Pagan said Monday night that the annexation would be of schools that are surrounded by city services. For example, he said, the city pays to maintain roads to the schools while the schools themselves don't provide funds to the city for road maintenance.

"The people who use the city services should be the ones who pay," Pagan said.

The schools are tax-exempt, but teachers and employees in those schools currently pay county occupational taxes. The city has an occupational tax rate of 1.78 percent, while the county's occupational tax is currently 0.35 percent. County officials have announced plans to raise the county's occupational tax rate to 0.70 percent next and up to 1 percent by 2021.

"There is some revenue associated with (those schools) because of the occupational tax," Pagan said.

The city and county have reached an agreement where both governments will split the occupational tax revenue, although it's not an even split, Pagan said.

County Judge-Executive Al Mattingly said the city and county came to an agreement on annexation in 2012. The county will receive some occupational taxes from the annexed schools, at a rate of 0.5 percent.

"I think in this we'll be getting more money than we were originally getting, because of the occupational tax increase," Mattingly said. The agreement is "better than having a public fight" over the occupational tax revenue, he said.

The annexation would put the schools into the area of city police and fire protection. Currently, those schools are served by the Daviess County Sheriff's Department and county fire departments.

"Our nation and state have had conversations about school safety," Pagan said, so expanding city police and fire services to those facilities "is a good thing."

The net profits from the occupational tax revenue the city collects will go into a "pension reserve account," Pagan said.

"It's not like it's money going into the general fund," Pagan said. The reserve fund was created as a "savings account for future pension costs," he said.

The annexation would not make those schools part of Owensboro Public Schools because the school district boundaries would not change, Pagan said.

DCPS Superintendent Matt Robbins called the move a "forcible annexation," that would hurt employees in those affected schools financially. The school district is weighing its options, he said.

"We obviously don't want to tip our hand what our legal argument would be," Robbins said. "But in the essence, we think it denies our sovereignty of our property when the government steps in to make a decision for us."

If employees at the annexed schools and facilities go from a 0.35 percent occupational tax rate to a rate of 1.78 percent, "it's a 400 percent increase from one to the other," Robbins said. "Many of them are loyal, faithful employees, but they work paycheck to paycheck.

"You go from paying $86 to $445 a year" in occupational taxes, Robbins said. "That's a big financial hit to many of our employees."

Robbins said the law on whether the city could annex the schools was unclear.

Pagan said the city attempted to work out a "revenue sharing" agreement with DCPS on the annexation, but district officials "would not engage or respond."

After tonight's first reading, the commission will hold a second reading at its next meeting in two weeks.

James Mayse, 270-691-7303, jmayse@messenger-inquirer.com, Twitter: @JamesMayse

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