The Harlan County Board of Education approved a 4 percent increase in the local property tax rate during a special meeting Tuesday evening.
After nearly 15 minutes of discussion regarding the various options available to them, the board reluctantly accepted a measure that would amount to an additional $25 on the tax bill for a home valued at $100,000.
By going for the 4 percent increase, the measure now must receive a public hearing prior to official passage. The board plans to set a special hearing on the tax rate prior to their next regular board meeting of Sept. 16, but must first meet the advertising requirements to notify the public as mandated by state regulations.
According to state statute, a hearing is required prior to passage of the four percent increase, but there is no option for the public vote on a recall of the new tax rate.
“I just wish we could keep it the same,” said board member Wallace Napier, lamenting the impact increased levies coming from every taxing district in the county will have on local property owners this year. “These people are going to get hit from every direction.”
“We went through every source there is for funding to try to avoid this,” said Gary Farmer, the board’s chairman.
With the arrival of property assessments certified by the Kentucky Department of Revenue and the Commissioner of Education on Aug. 25 — a month later than usual — the board is under a tight deadline to approve the new tax rate in time for the Harlan County Clerk to send tax notices out at the usual time.
The general fund tax levy of 43.3 cents on real property and personal property is expected to generate $4,838,908.57 which is an increase of $290,301.01 above the amount collected in the prior year. This amounts to only a small percentage of the funds required to operate Harlan County Schools, whose budget is in excess of $27 million this year.
After proposing the board approve the four percent rate plus a nickel (which would qualify for matching funds from the state), Farmer’s motion died for lack of a second. The board then voted 4-1 to accept the 4 percent stand alone rate, with Pam Sheffield voting against it.
Part of the need to raise taxes, according to Superintendent Mike Howard, was the significant drop in Harlan County’s property values over the past year. As of January 2013, Harlan County had an adjusted tax base valued at $1,141,160,809. By January 2014, the total value of adjusted property had dropped more than $23 million to stand at $1,117,530,847, which does not include any homestead exemptions that have been granted this year.
While real estate values have grown, the amount of tangible property in Harlan County has dropped by over $50 million, requiring schools and other public agencies to increase taxes to maintain the same level of funding relative to the years immediately prior.
Howard also noted how their tax rate and the revenue projections are tied into the district’s bonding capacity as well as the various state and federal programs from which students receive services and supplies.
“Nobody likes the idea of raising taxes, but when you look around our region and at the county districts next to ours, 43.3 cents would be a good rate,” Howard said.
The current tax rates in Bell, Leslie and other neighboring districts is 50.9 cents, he reported.
Farmer noted that Harlan County also does not benefit from much of an industrial and commercial tax base that several districts in the state and some others in the region do.
In fact, the opposite has occurred, with coal companies shutting down and removing much of their tangible equipment from the community, he added. This has contributed to much of the declining value of local property over the past year.