Clark County, Ky. Insurance Premium Tax Defeated

Widespread resident’s disapproval of a proposal to levy an 8 percent tax on insurance premiums has resulted in its defeat in Clark County, Ky. Fiscal Court. A standing-room-only crowd of almost 400 people attended a three-hour meeting during which the tax was vetoed.

The measure, proposed by Third District Magistrate Jerry Rogers would have avoided a projected $1 million shortfall in the 2005-2006 budget. When the final vote was taken, Judge/Executive John Myers called for a second to Richardson’s motion, Rogers was silent.

After the meeting, Rogers said little about why he backed away from his call for the insurance premium tax. “All I can say is right now it’s pretty apparent we’re going to have to let the state decide the financial conditions of the county,” he told the Winchester Sun.

Myers said he will not propose a tax increase at the next fiscal court meeting. “This community has spoken. They want no taxation whatsoever,” he said.

Two weeks ago, the fiscal court approved first-reading of the insurance tax by a 7-1 vote. The proposal would have levied an 8 percent tax on all insurance policies with the exception of health, life and workers’ compensation outside Winchester. Insurance companies would have added a collection fee, bringing the amount paid by county residents to 9.2 percent.

Magistrates became trapped in a parliamentary quagmire that required any changes to the tax to be submitted in writing prior to a vote. Suggestions that members might spontaneously submit in writing a 4 or 6 percent tax ended with no formal written proposal being made for a lowered insurance tax.

Myers said he will ask state auditors to review county finances to confirm that the county is faced with a $1 million shortfall, as projected.

That figure was questioned at the meeting when residents presented a worksheet obtained from Clark County Treasurer Henry Branham, which anti-tax proponents contended was proof that the county will not face a revenue shortfall next year, as predicted. The worksheet concluded that revenue will drop from $12,686,844 during the current fiscal year, to $9,323,152 next year.

Proponents argued that the drop in anticipated revenue is not realistic, and that the county would have enough revenue to pay expenses next year without a tax increase.

As at the previous meeting, a succession of tax opponents lined up to speak against the proposal. “With all the people you have here, you can tell your constituents do not want a tax. They’re not interested in an 8 percent tax. They’re not interested in a 4 percent tax,” argued Henry Mattingly to widespread applause.

Some county residents argued they don’t receive services equal to those of city residents, who already pay an 8 percent insurance tax.

The insurance tax, if not already dead, would have to be resuscitated quickly in order to take effect for the next fiscal year. According to state regulations, local governments must submit any insurance tax rate to the state, which collects the tax, no later than March 23.

Needing two readings to take effect, and only two regular fiscal court meetings scheduled prior to that deadline, if the fiscal court takes no action during its next meeting, it will in all likelihood run out of time to approve the tax prior to next month’s deadline.

Topics Kentucky