Governor Andy Beshear signed an executive order limiting how much people could pay in vehicle property taxes for the next two years. The tax bills must use Calendar Year 2021 assessed values instead of the current higher prices.

Beshear cited the highest inflation in 40 years for the need to act. He said the move would save Kentuckians $340 million. County clerks will issue rebate checks to anyone who has already paid the higher tax bills.

Inflation dramatically impacted car prices in Kentucky: The average motor vehicle property tax valuation increased from $8,006 to $11,162 – a nearly 40% increase.

House Bill 6, sponsored by Representative Sal Santoro (R-Union), similarly would freeze automobile assessments based on 2021 values. The House passed the bill 95-0; it now awaits action in the Senate Appropriations and Revenue Committee.

The governor and Representative Angie Hatton (D-Whitesburg) announced that she would file legislation to reduce the state’s sales tax from 6% to 5% starting on July 1. If passed, Hatton said the measure would expire on June 30, 2023.

Beshear said that change would save Kentuckians $873 million. He added that the combined moves would require the General Assembly to keep the state’s rainy-day fund at current levels, which he called an “all-time high.”

House Speaker David Osborne (R-Prospect) released the following statement:

“While we have yet to see the governor’s plan, it appears he and the House Minority Leadership have finally accepted that the state’s economy isn’t as strong as they want us to believe. These proposals are yet another piecemeal, short-term approach that doesn’t sufficiently address the problems Kentuckians face. Of course, we appreciate the governor’s sudden interest in his administration’s policies as they relate to the motor vehicle tax, particularly since last week the House approved legislation that would not only set the motor vehicle tax at the 2021 rate but also address assessment issues that stem back to his father’s administration. The unfortunate part of this is that he showed today he could have remedied this weeks ago.

“However, while he supports lowering the state sales tax, we are hopeful he eventually recognizes that far more can be accomplished for Kentuckians by overhauling the state’s antiquated tax structure. Why should the people of Kentucky settle for a temporary 1% sales tax cut when we can adopt policies that let them keep more of their hard-earned money in the first place?”

Senator Donald Douglas (R-Nicholasville) spoke for the Senate Majority Caucus when he released the following statement:

“Although it took longer than it needed to, this is a win for Kentucky taxpayers. The Senate took a firm stand last Friday, and I am proud because it means financial peace of mind to our people. The language of Senate Joint Resolution 99 was included almost verbatim as the governor’s executive order. This is quite the flip-flop from an administration that not only argued they did not have this authority but actually issued a memorandum outlining the motor vehicle tax increase.”

“This tax relief is just the first step. I would encourage the governor to continue listening to the legislature. If today is any indication, he will be supportive of further tax reform to bring tax relief to Kentuckians.”