Daviess County Fiscal Court is poised to approve its largest decrease in the real property tax rate in more than a decade, with plans to drop the rate from 12.9 to 12.2 cents per $100 of assessed value for 2025.
The proposal was introduced during Thursday’s Fiscal Court meeting with the first reading of the ordinance. If adopted on second reading later this month, the new rate would mark the steepest single-year cut since at least 2008.
County Treasurer Jordan Johnson said the move to adopt the compensating rate — which would bring in roughly the same amount of revenue as the prior year — is a fiscally responsible one made possible by significant growth in real property assessments.
“There are two primary calculated rates, the first being the compensating rate, which is the rate that would produce the same tax revenue as the prior year,” Johnson said. “The second is the rate that allows for a 4% increase in revenue. The preference indicated to me was to adopt the compensating rate, which results in a decrease from 2024 property tax rates.”
The real property tax rate for 2024 was set at 12.9 cents per $100 of assessed value. The proposed 2025 rate of 12.2 cents would generate roughly $10.36 million, slightly more than the $10.19 million generated last year, thanks to growth in property values.
“After examining the county’s current financial position and projecting out several years, adopting the compensating rate would generate sufficient revenue to manage the fiscal year 2025-2026 budget with no apparent negative impact to future fiscal years,” Johnson said. “I’ve prepared the tax ordinance accordingly.”
While the real property tax rate is being lowered, all other ad valorem tax rates are remaining unchanged. The tangible personal property rate will stay at 13.8 cents per $100 of assessed value, and the motor vehicle and watercraft rate will remain at 17.0 cents. Other classifications are either derived from these rates or set by the state, Johnson said.
According to Johnson, the Fiscal Court could have kept the rate as high as 12.6 cents (which would have allowed for 4% increase of revenue) per KRS 68.245(6). He said that would have resulted in an estimated $395,000 more in revenue than the compensating rate.
In an email sent to Fiscal Court members, Johnson said that typically, he would recommend the 4% allowable rate in consideration of cost-of-living adjustments and events through the year that had an impact on the County’s tax revenue. But, he did not think it was necessary this year.
“The issue with dropping the rate is that, as expenses rise, Fiscal Court is very limited on how much the property tax rate can be raised each year,” he wrote in the email. “However, after thorough review of our tax and non-tax revenues in light of trending revenue performances and known upcoming expenses, I see no reason to recommend any rate above that of the compensating rate.”
The drop in the real property rate continues a recent downward trend. After holding at 13.6 cents for eight years, the rate was lowered to 13.5 in 2016. It dropped again to 13.40 in 2020, then to 13.0 in 2022, and to 12.9 in 2024. The proposed 12.2 rate would be the lowest in at least 17 years.
