Take Back Kentucky Legislative Action Alert
Sponsor(s): R. Alvarado, D. Thayer, J. Schickel
Status: Jan 6 Introduced, Jan 7 Assigned to Committee
Committee: Senate State and Local Government
Timeframe: Committee meets every Wednesday @ 12PM in Annex Room 154
Message is for: All Senate Leadership, Members of the Senate State and Local Government Committee, and YOUR Senator.
Message: “Support Senate Bill 71, Reign Taxing Districts from manipulating the rates to favor higher taxes.”
Optional: E-mail the legislators on the committee. Example e-mail address: Firstname.Lastname@lrc.ky.gov . If that doesn’t work they have a contact page on their informational page.
Information: Background: Kentucky allows for the creation of taxing districts, to separate duties from a city council or fiscal court, and create tax revenue specific to those duties. However, due to new case law in Kentucky, these entities are allowed to raise their tax revenue annually using the “compensating rate” rule, instead of having a fixed tax rate. Under this rule, a taxing entity can raise “compensating rate” plus 4% more, and the voters have no recourse. Compensating rate is supposed to be the tax rate that will bring in the same amount of tax revenue next year as was brought in this year. The “compensating rate” calculation is inherently flawed in favor of the taxing entity. Because each year is based on the real revenue, and not the estimated revenue, taxing entities compound these math errors annually, in their favor.
This bill: This bill would require that any special purpose government entity with the power to levy taxes to have any proposed rate more than “compensating rate”, but less than compensating rate plus 4%, be approved by the city council or county fiscal court. Elected officials would have the final say-so in any tax rate increase. Rejected rate increases would result in no increases for at least one year.
Cons: It’s not perfect. They can still abuse the compensating rate formula to increase tax revenue faster than property values increase. Also, any rate change above “compensating rate” plus 4% would be under the current citizen “recall” provisions.
Pros: It will limit the abuse significantly.
Summary: It’s not a perfect bill, but it’s a pretty good one. It will start reigning in rogue taxing entities. More needs to be done, but this is a very good first step.
PDF Version:SB 71 – 2016