By Al Cross
Al Cross
If newspapers are to survive, they must give their communities information that they need and want – and that they can’t get anywhere else. They also need to distinguish themselves from other sources of information by being independent of the people and institutions they cover.
Example: Citizens want to know how their taxes are being spent, and how their tax rates are being set. But increasingly in Kentucky, the process of setting property taxes is not well covered by many newspapers. In falling short of the mark, they may fail to exercise their role as independent watchdogs of government.
For the last 10 years or so of my 20-year run at UK’s Institute for Rural Journalism, I wanted to write about this problem, but it showed up at one of my busiest times of the year, and I kept putting it off. But the problem has kept getting worse, and now that I’m retired, I’ve found time to write about it.
Local governments usually set their tax rates in late summer, but the first news in this process is actually committed by April 1, when county property valuation administrators must file their estimates of the value of property in counties and cities. This helps counties, cities and other taxing districts prepare their budgets for the fiscal year that begins July 1.
In June, the state Department for Local Government must tell the counties, cities and districts how much money they can expect from certain property-tax rates, based on the newly assessed value of property in their jurisdictions. This notice is required by the tax-limiting law in KRS Chapter 132, enacted through House Bill 44 of the 1979 special session of the General Assembly.
The main effect of the law has been to limit revenue increases from local property taxes to 4 percent per year. A county, city or district can set a tax rate estimated to generate a revenue increase of more than 4 percent, but it must hold a special public hearing, and the rate is subject to a petition for a voter referendum. If the petition signatures amount to at least 10 percent of the votes cast in the last presidential election, the tax rate goes on the ballot. Given all that, it’s unusual for a taxing authority to vote for a revenue increase of larger than 4 percent.
Note that is a revenue increase, not a rate increase. One of the most common errors I see in news stories about property-tax rates is that a taxing authority raised taxes 4 percent, when in fact all it did was enact a rate to generate 4 percent more money.
The revenue increase is not the same as the rate increase because real-estate assessments go up each year – all real estate must be reassessed every four years, and PVAs typically do about a fourth of their county at a time – and personal property and new property, such as buildings, are not included in the tax-rate calculations.
So, in many if not most cases, tax rates go down but property owners pay more taxes because their assessments have gone up.
This isn’t always made plain in meetings of fiscal courts, city councils and school boards – or at least in some of the news stories about those meetings that I have seen in newspapers and broadcast media over the decades since the law was passed.
For example, one of Kentucky’s better weekly newspapers recently ran a story with the headline, “Fiscal Court lowers property tax to historic low.” The story said the tax rate was lower than it had been at least since 1993. But what it didn’t report was that the county’s property assessments were at a historic high. It also didn’t say the Fiscal Court had set a tax rate estimated to generate 4 percent more revenue.
Many taxing authorities set what the state calls a “compensating rate,” estimated to generate the same amount of revenue as the previous year. That rate is calculated by the Department for Local Government and included in the annual notice it sends each June. It also calculates the rate that will generate 4 percent more revenue.
In the case above, the Fiscal Court set a tax rate of 5.9 cents per $100 value of property; the compensating rate would have been 5.7 cents.
Based on my reading of local news stories on this topic over the last 40 years, many local officials apparently think these rates are the only two choices they have. In fact, they can set any rate they want, subject to the 4 percent threshold for a public hearing and referendum petition. Also, they can take advantage of a law allowing an extra 5-cent-per-$100 tax for special purposes such as new schools.
The biggest thing that doesn’t get covered in stories relating to tax rates are city, county and school budgets. You can’t make a budget without knowing how much money you’re going to have, so when a taxing authority adopts a budget, it pretty much knows what tax rate it is planning to levy.
So, the time to start asking about tax rates is when the budget is being considered, in May and June. Or even in April, when your PVA has to report the new assessments. Mark your 2026 calendar.
More focus on this process can help improve the process and give your readers information that they are unlikely to get anywhere else.
I imagine that some local officials claim, on social media or elsewhere, that they have cut taxes – when what they have actually done is cut tax rates even as they vote to get more money to spend. Their constituents need to know the facts, and your newspaper is in the best position to deliver those facts.
Deliver them, and your community will put a higher value on your paper as a community asset. You might even remind them of that independent-watchdog work when you ask them to subscribe.
Al Cross, of Frankfort and Albany, is University of Kentucky professor emeritus of journalism and was a weekly newspaper editor and manager in Monticello, Russellville and Leitchfield in the 1970s.
