On its face, the lowering of the property tax rate may seem like a goodwill gesture from metro government leaders, but it turns out that an almost 40-year-old law is the true source of the change.
Louisville-Jefferson County Metro Government has proposed lowering the property tax rate from 12.54 cents per $100 of assessed value to 12.45 cents.
“The rate reduction reflects a continued strong real estate market consistent with our locally expanding economy,” the city’s CFO Daniel Frockt said in a news release.
The value of existing property values — which doesn’t include new construction — has risen roughly 4.7 percent as of the most recent property assessment, but according to a law commonly referred to as House Bill 44, the city cannot reap the full benefits of that increase.
The law, which was passed in 1979, regulates changes to the property tax rates. Cities can only receive 4 percent more in property taxes year over year unless citizens through a popular vote give the city the authority to raise the rate even higher. For instance, if property values rose 6 percent one year, the city would need to decrease its property tax rate by 2 percent.
Based on the numbers above, the city had to drop its property tax rate by 0.7 percent. Add to that the 4 percent increase that the city is allowed to take, and that’s how you arrive at the conclusion that existing property values rose just under 5 percent.
Frockt told Insider Louisville that property values countywide total roughly $59 billion. That number does include some new construction.
All that said, the change won’t have much impact on the average resident or even businesses since property taxes are mixed in with other taxes including the motor vehicle tax, a tax to benefit Jefferson County Public Schools, and a tax on tangible property such as furniture and business-related equipment.
Not to mention the fact that some neighborhoods within Jefferson County tack on additional property tax for neighborhood residents. Anchorage, for example, charges residents an additional 41.6 cents per $100 of assessed value. St. Matthews charges 20 extra cents.
The release notes that the property tax decrease will amount to 90 cents in savings per $100,000 of assessed property value.
Louisville-Jefferson County Metro Government doesn’t break out property tax revenue in its budget line items, but last fiscal year, the city expected to bring in $128.4 million in revenues from property, tangible and motor vehicle taxes. In fiscal year 2017, that number is up 3.8 percent to $133.3 million.
The new property tax rate must be approved by Louisville Metro Council. The council will host a public hearing at noon on Thursday, Aug. 25, in room 106 of Metro Hall.
The new rate will be reflected on citizens’ and businesses’ tax bills sent out in November.