The Harlan Fiscal Court discussed the 2016 county tax rates during a meeting on Tuesday, ultimately leaving real property rates unchanged and cutting the tangible property rate by 25 percent.
“This is the property tax rates that are required to be set annually by the fiscal court,” Harlan County Judge-Executive Dan Mosley said. “Last year, we saw the highest increase in the compensating tax rate that we’ve ever seen in the history of Harlan County due to the decrease in unmined coal. The state has proposed another similar increase for this year, and I’m strongly opposed to this increase.”
According to Mosley, the compensating rate is designed to generate the same revenue as the previous year.
“Last year it increased a sizable amount, and the proposed increase this year…it’s absurd,” Mosley said. “It’s an increase that I don’t feel the taxpayers of this county should have to burden. I think we have cut spending drastically due to the economic situation here in eastern Kentucky, and I feel our taxpayers have been burdened enough through the loss of employment.”
Mosley said applying the compensating rate would unfairly impact the county’s taxpayers.
“You lose your job and then you get higher property taxes? I think it’s wrong,” Mosley stated.
Mosley pointed out the court has cut many costs in an attempt to lower the tax burden.
“By not accepting this compensating rate increase, we will be forfeiting some revenue,” Mosley said. “There’s no question about it. There will be revenue that we will be forfeiting. But, I personally think our taxpaying citizens deserve a break. We’ve got to continue to be more financially responsible.”
Mosley said the court cannot control what other taxing districts do with their tax rates.
We cannot control what they do,” Mosley said. “But we can control what we do. And I want to propose today that we leave the real property rate in place at what it is presently, not accept the compensating rate and cut the tangible tax rate by 25 percent.”
Tangible tax applies to inventory and equipment and generally impacts businesses rather than private citizens, according to Harlan County Treasurer Ryan Creech.
Mosley explained some of the money saving measures the court has already employed.
“We have cut costs,” Mosley said. “The health insurance negotiations saved us $100,000, the property insurance audit saved us about $25,000 and not replacing personnel that have retired or moved on has saved us about $175,000. We’ve made at least five percent budget cuts across the board — with the exception of the jail fund because of the situation with the facility — we have shored up our general fund. I think we’re in a position now to be able to take this this year and not pass this burden on to the people…I think we’re much more financially solvent than neighboring counties.”
Mosley added there have been large hits to the local economy due to the coal situation in the last few years.
“In four years, the overall assessment has declined $223 million,” Mosley said. “Unmined coal dropped another $53 million this year, last year it dropped nearly $100 million…That’s the situation we’ve been dealt. Much of it is not within our control. The only thing we can control is the rate we set and adjust our spending accordingly. As the people have had to make tough decisions and tighten their belts, so have we.”
Mosley asked Creech to explain what not taking the compensating rate would mean to the county.
“If we leave the real property rate the same based on the amount of taxable assessed property in the county, and put the tangible rate at .501 down from the .6668, you’re talking about negative revenues of $580,000,” Creech explained. “That’s money that you will never get back. Once you’ve done this, you won’t receive those funds back.”
Creech said the county is currently in the financial position to adjust the rates in this fashion.
“You’re talking about generating the about the same amount of revenue that you generated in 2015,” Creech explained.
Magistrate James Howard said he agreed with Mosley’s assessment.
“We simply cannot pass anymore tax burden on to our taxpayers,” Howard said.
Magistrate Bill Moore mentioned there were over 1,800 delinquent tax bills this year.
“That’s up 200 or so from previous years,” Moore said. “There’s no way the people can bear this burden. I think the county’s in shape to bear it…We need to take care of our people.”
After some further discussion, the court passed a motion stating the county would not accept the compensating rate, reset the tangible property rate at .501 cents per $100, cutting that rate by 25 percent, and leave real property tax at last year’s rate of 41.5 cents per $100 of real property value.
Reach Joe P. Asher at 606-909-4132 or on Twitter @joe_hde