COVINGTON, Ky. — Amid a budget crunch after hundreds of federal jobs were eliminated in Covington, causing a massive loss in payroll tax, we sat down with Mayor Ron Washington to see where his priorities lie for the city's spending.
Our content partner LINK nky originally reported that the budget took a hit with the late-June revelation that the city's second-largest employer, the Internal Revenue Service, had cut ties with 750 employees. The job cuts axed the city's payroll taxes by $1.5 million.
Before he addressed the impact on the city, Washington acknowledged the IRS workers who no longer worked inside the Gateway Center.
"When you lose your job and your ability to provide for your family, it's going to hurt," he said. "My hearts go out to them."
WATCH: We go one-on-one with Covington Mayor Ron Washington
The $1.5 million lost from IRS jobs comes on top of the city already losing out on approximately $4 million in payroll taxes from work-from-home policies.
"Work from home has hurt the City of Covington like many states in the State of Kentucky, the way our taxes are structured," Washington said.
We asked if the city was trying to do anything to entice workers to come back and work in person.
"Well, we've met with some employers, and we've encouraged them and explained to them how this hurts the city," Washington said.
In addition to encouraging existing businesses to bring workers back in person, Washington said the city's Economic Development team is working toward additional job creation to replace lost payroll tax revenue.
"We're putting them on steroids and sending them out and shaking every tree possible," he said.
An internal email from the city shared with WCPO indicates the city may have to use remaining federal American Rescue Plan dollars to fill shortfalls in the 2026 budget year. That funding will not be available in 2027.
We asked what would be prioritized if cuts to public services were necessary.
"Well, always public safety," Washington said. "That's what cities are here for, is to make sure public safety."
The mayor said he didn't expect service cuts at this point, but "belt tightening" would be necessary.
