Friday, July 27, 2001

Property tax given scrutiny


Lawmakers consider its future

By Mark R. Chellgren
The Associated Press

        FRANKFORT — Property taxes, long a political football in Kentucky, could be in play again if the General Assembly takes up tax reform in 2002.

        This time, the debate might go beyond the issue of limitations imposed in the heat of a gubernatorial race 22 years ago.

        Sen. Dan Kelly wondered aloud Thursday whether the property tax generally has outlived its usefulness for state government.

        Mr. Kelly, the Senate Republican floor leader from Springfield, said the property tax is raising a smaller and smaller percentage of the state's General Fund while still expensive to assess and collect. “At some point, we may decide the property tax is not something we want to use in financing the state government and leave that to the local governments,” Mr. Kelly said.

        William Fox, a University of Tennessee consultant hired by the legislature's subcommittee on tax policy issues, said many states do not impose property taxes, though it is the primary revenue tool for most local governments.

        Rep. Harry Moberly, D-Richmond, chairman of the House Appropriations and Revenue Committee, said another topic of discussion should be whether to lift some of the restrictions on state government property tax receipts to put them in line with the rules local governments live by.

        State government receipts from taxes on real property — basically land and buildings — can grow no more than 4 percent annually in the aggregate. As property values have risen, this has meant that the tax rate on real property has fallen from 31.5 cents per $100 assessed valuation in 1979 to 13.6 cents this year.

        Local governments that impose property taxes can exclude property new to the tax rolls each year from the annual 4 percent ceiling calculation. In addition, local governments can exceed the 4 percent cap, but the new rate is then subject to local voter recall..

        The tax on real property raised about $187.8 million last fiscal year out of total property tax receipts of about $407 million.

       



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- Property tax given scrutiny