The Letcher County Board of Education has voted to increase its property tax revenue by four percent, but the new rate is six cents lower than last year's assessment.
Roger Martin, director of finance, said the assessment by Letcher County Property Valuation Administrator Randy Hall is the key to understanding the tax rate.
"The assessment is what has gone up and is what makes the tax rate come down," said Martin. "The compensating rate would have given us the same amount of revenue as last year. We chose and have in recent years to increase our revenue by four percent."
The four-percent increase on real estate is the maximum amount allowable under Kentucky law without being subject to recall by registered voters.
With simpler numbers, here's an example of how that sort of arithmetic can work:
Each year that property values rise, Kentucky school boards face options:
- They can lower tax rates enough to get the same revenue as last year. That's the "compensating rate" Mr. Martin mentioned.
- They can lower tax rates in a way that produces more revenue, up to 4 percent growth, and those changes are not subject to voter recall. That's the reason district leaders speak of "taking the 4 percent" as the maximum boards usually consider.
- They can set a tax rate that produces more than 4 percent growth, knowing that voters have the option of calling a recall election to change that rate.