Property Tax Calendar Focus of Legislative Committee

Property Tax Calendar Focus of Legislative Committee

Legislators learned Thursday just how complicated and tightly linked the process is of assessing and collecting property taxes. The Kentucky League of Cities joined the Kentucky Association of Counties (KACo), the Kentucky School Boards Association (KSBA), the Department for Local Government and the Department of Revenue to discuss how the property tax calendar works. Testimony before the Interim Joint Committee on Local Government highlighted the steps taken to determine how much property owners pay and how it is divvied up between counties, cities, school boards and special taxing districts.

Legislation passed in 1979 requires any property tax revenue increase of more than 4 percent be subject to a recall and sets rules for such a referendum. Representative Stan Lee (R-Lexington) sponsored House Bill 49 in the 2019 session, and Governor Bevin signed the bill into law in March. It gives anyone seeking such a recall in an urban county government more time to file a petition. Additionally, it changes requirements for petition signatures.

Those testifying Thursday morning explained that the time frame currently provided for levying and collecting property taxes is based on a series of steps that involve multiple departments and is governed by a constitutional requirement that all taxes be finalized by January 1.

While city governments have their own process for property tax collection, the ability of a city to impose and collect the tax is impacted by the same assessment and recall process set in statute. The current property tax calendar makes it impossible for cities to levy a rate that would produce revenue above the compensating rate as the property value administrator does not complete assessments until sometime in June. That is the same time most cities must set property tax rates to ensure compliance with the previous deadline for a possible recall petition.

Among the many delays tax districts face is a requirement that all tax notices be published in a local newspaper. Representative Rob Rothenburger (R-Shelbyville) acknowledged many local newspapers only print one or two times a week and other avenues of posting information may be more practical. “We have got community newspapers that are going out of business, and that’s making it very difficult for counties and cities to advertise those rates,” he remarked.

The Kentucky League of Cities is continuing to advocate for modernization of publication requirements. “In the age and time that we live in, there are other means and other modes for us to look at possibly using for notification,” said LaRue County Judge/Executive Tommy Turner. He added that other methods of communication could possibly speed up the process and reach more people. Rothenburger agreed. “We’re looking for efficiency and we’re looking for more openness and transparency, and I think to get the word out to the general public, social media and websites may be the answer,” he responded.

Eric Kennedy, governmental relations director for KSBA, described property tax collection as “a relay race.” He pointed out that it is the oldest tax in Kentucky and the only one provided for in the state constitution. He also reminded legislators that local governments are revenue limited and “have their hands tied.” KLC has made revenue diversification a top legislative priority as cities look to state leaders to provide local governments more tools to fund required services.

Fayette County Clerk Don Blevins suggested that the state create a task force or other type of group to hash out ways to improve the property tax system. KLC representative Bert May replied that cities “need to be at the table” when and if such a meeting occurs. Committee chairman Representative Michael Meredith (R-Oakland) agreed that such input is needed. He closed the meeting by telling those in attendance, “I would encourage and empower you all to try to help us come up with a solution.”