Daviess County Fiscal Court will be lowering the tax rate on insurance premiums from 8.9% to 7.2%, for property outside Owensboro and Whitesville city limits, effective July 1. They will drop the rate to 4.9% next July.
Judge-Executive Al Mattingly and the court during their Tuesday meeting heard the first reading of an ordinance to lower that tax rate to 7.2% for the upcoming fiscal year. Fiscal Court will officially vote on the ordinance during their Feb. 18 meeting.
In 1973, Fiscal Court created a 4.9% tax on insurance premiums to help fund the county fire services.
In 2010, the court raised the rate to 8.9% to pay off the $20 million they borrowed to help pay their portion of the cost for the Owensboro Convention Center — a move made with the agreement that the tax rate would revert to 4% once the debt was paid off.
“When we put the (extra) 4% on, Daviess County put a sunset clause in that said once we have recovered enough funds to service the obligation of the bond, then we must remove the tax,” said County Treasurer Jim Hendrix.
Fiscal Court members expected the $20 million debt to be paid off in 2030.
However, after refinancing and paying an additional $500,000 toward the principal in 2014, they cut six years out of the term. Hendrix said since then they have still been overcollecting by nearly $100,000 per year, meaning they can shorten the term even further as well as lower the rate.
“If we did not modify it, we would overcollect by about $1 million by Fiscal Year 2022,” Hendrix said. “… I anticipate that a year from now, I’ll be back with an ordinance that removes that (extra 4% instituted in 2010) totally.”
Mattingly he’s pleased they are able to lower the rate for the upcoming fiscal year and reduce it even further next year.
“It’s just one of those things that through good management and being fiscally conservative that this Court has been able to pay this tax off eight years earlier than it was due to be paid off,” he said in a video statement Tuesday. “We’re happy to do that.”
