Property taxes for local home and business owners have slowly risen since the 2008 recession, but not enough to put the matter to a public vote.
That’s the norm around the state for cities, school districts, fiscal courts and other local government appendages with the authority to tax property. Tax experts say officeholders reflect the public’s mood that emphasizes cuts in spending rather than large tax increases.
“… Certainly during the recession, I think there’s been a clear reluctance to raise any taxes, and property tax is the most regulated in terms of restrictions that the state imposes on local government,” said William Hoyt, director of the University of Kentucky’s Martin School of Public Policy & Administration.
Hoyt noted that state law limits how local governments can tax residents and businesses, leaving most municipalities reliant on property and payroll taxes as primary revenue streams.
Since 2007, Franklin County property tax rates have climbed from 14 cents per $100 of property value to 15.7 cents per $100, which was approved this year by fiscal court.
That means on a $100,000 home, an owner will pay $157 when taxes are due, about $2 more than last year.
But every fiscal year since 2009, fiscal court has taken less than the compensating rate, which is calculated to keep property tax revenues flat. Fiscal court took the compensating rate in 2008.
The city’s property tax rates have gone from 19.9 cents per $100 in 2007 to 21.3 cents per $100 today. The City Commission sought a 4 percent increase as recently as 2009, but it has taken the compensating rate the past two years.
A city resident with a $100,000 home will pay $213 in property taxes this year, about $5 more than last year.
Some nearby cities and counties – such as Shelbyville and Jessamine and Madison counties – have held the line with property taxes recently, but others – Lawrenceburg, Winchester, Richmond and Anderson County – have opted to raise rates, sometimes taking the full 4 percent allowed by law before a voter referendum.
Still, some voters have grown weary of tax increases, as evidenced by the recent popularity of the tea party movement.
The push against tax increases has limited budgetary discussions, especially at the state level, to focus only on spending cuts, said Tracey Roberts, an administrator with the University of Louisville’s Louis D. Brandeis School of Law.
“Always in the past, there’s the question of can we increase revenues by raising taxes and can we cut the budget?” Roberts said.
“Those questions have historically gone together, but I think recently only half of that question is being asked. People are looking for budget cuts and not asking the additional question about whether taxes should be raised.”
Property values have dropped statewide, but Kentucky has fared better than other states that have had property values plummet since the 2008 recession, according to Hoyt.
“You’ll see that there were some fairly substantial reductions in property tax revenues, but if you actually look at them, they were not as bad as, for example, the reductions in the payroll tax revenue,” Hoyt said.
But that doesn’t hold true for Frankfort and Franklin County. For both governments, revenues have steadily increased since the recession hit.
The city saw property tax receipts climb from $2.76 million in 2008 to $3.01 million last year, a 9 percent increase overall. Similarly, the county’s property tax receipts rose from $3.4 million in 2008 to $3.96 million last year, up 8.5 percent.
Property values in Franklin County have slightly risen since 2008 as well, according to PVA numbers. Properties were worth $2.84 billion this year, up about 3 percent from the $2.75 billion assessment in 2008.
Here’s a look at other property tax rates in Franklin County:
>Property tax rates will stay virtually the same for thousands of Franklin County homeowners this year, but Frankfort residents will see theirs rise.
The Franklin County Board of Education approved a property tax rate of 57.1 cents per $100 of assessed value, which means $1 more in taxes on a $100,000 home.
That figure – the compensating rate – could generate roughly the same amount of revenue as last year’s 57 cents, or slightly more if the school district collects all the taxes owed it.
But it could also mean $995,941 less revenue – 4 percent less, if collections are average. The district’s total budget is about $54 million with a rainy day fund of $4.5 million.
The Frankfort Independent Board of Education voted unanimously for a 2.7 cent property tax increase that will generate an additional $78,976 for salaries and school building maintenance.
Residents will now pay 72.5 cents per $100 of assessed value on real and personal property. Last year’s rate was 69.8 cents.
The tax increase is the maximum 4 percent allowed without triggering a vote and possible recall by Frankfort residents.
The district’s entire budget is about $8 million.
School boards in nearby Boyle, Clark, Fayette, Madison and Scott counties and Danville took the maximum 4 percent increase, according to news reports.
The Jessamine County Board of Education opted for a smaller, 2 percent increase, and the Anderson County Board of Education voted to keep the same 55.2 cent property tax rate for the third straight year.
Brad Hughes, spokesman for the Kentucky School Boards Association, said he’s observed an equal number of districts levying the compensating rate as the 4 percent increase.
He estimated that a smaller percentage – maybe 15 percent – have kept the same rate for the last several years. Least popular of all is cutting taxes; he’s only read news coverage of two school boards lowering taxes this year, in Carter and Pike counties.
“A few years ago, the compensating rate was the norm, and if you were growing in enrollment or needed to build up your contingency fund, those districts would take the 4 percent,” Hughes said.
But now more school boards are opting for a 4 percent increase to safeguard against state funding cuts, he said.
Hughes says he hasn’t seen any attempts this year to levy more than 4 percent in additional tax revenue, a decision that is subject to public recall.
“If there are any trends at all, it’s that districts are doing a better job telling the public in advance what their financial situation is – we’ve seen that more in this state this year,” he said.
“They (school board members) understand that they have to make a case to the public as to why they need the additional revenue.”
>The Paul Sawyier Public Library Board of Trustees voted to lower its property tax rate from 9 cents per $100 of assessed value to 8.7 cents.
Donna Gibson, executive director of the library, said the board members wanted to show they’re aware that taxpayers are struggling.
“They (board members) felt that the budget we have now will take care of our needs, and in these economic times, we need to be cognizant of what everyone is going through,” she told The State Journal.
“If we can be of help in some way by using the budget we have, then that’s what we want to do.”
>The Franklin County Board of Health kept its current rate of 4 cents per $100 for the new tax year.
>The Franklin County Extension District Tax stayed at 1.3 cents per $100 this year.
>The Franklin County Soil Conservation District Tax remained at 0.8 cents per $100.