City of Owensboro homeowners are expected to see a small drop in their property tax rate for the upcoming fiscal year, with officials saying the proposed rate reduction is largely due to rising property assessments.
The City Commission on Tuesday introduced a measure that would set the real property tax rate at 25.60 cents per $100 of assessed value, down from 26.1 cents last year.
Angela Waninger, Director of Finance and Support Services for the City, said that the City is opting to take the maximum allowable 4% increase in revenue (not in rate) allowed by law without requiring a public referendum.
“When assessments go up, the rate has to come down if we’re only taking a 4% revenue increase,” Waninger said. “It’s not a rate increase of 4%, it’s a revenue increase of 4%.”
The City had the option to adopt what’s known as the “compensating rate,” which would generate the same revenue as the previous year. Instead, officials chose the 4% increase to help offset rising expenses.
“Expenses are going up faster than 4% in many cases, so it behooves us to take that,” Waninger said. “Moody’s [bond rating agency] actually downgraded our bond rating twice back when we didn’t take the 4% increase. It’s the most stable revenue stream a city has, and they expect you to use it.”
The ordinance also sets the personal property tax rate at 30.91 cents per $100 of assessed value and keeps the motor vehicle rate flat at 30.30 cents, a figure unchanged since 2007 due to statutory caps.
According to the ordinance, the City expects to collect just under $15 million in total ad valorem tax revenue:
- $12.16 million from real property (based on $4.75 billion in assessed value)
- $1.43 million from personal property (based on $462 million in assessed value)
- $1.36 million from vehicles (based on $449 million in assessed value)
For most residents, only the real property and vehicle taxes are directly applicable, as personal property taxes primarily impact businesses and manufacturers with equipment and furnishings.
Waninger noted the increase in assessments includes not just rising home values but also new construction, which compounds each year to increase the base for future years.
“Even though the City is taking the full 4% allowable revenue increase, the tax rate itself is going down, and that’s great news for Owensboro,” she said.
A second reading and final vote on the ordinance is scheduled for September 16. If approved, the rates would apply to the fiscal year beginning July 1, 2025, and ending June 30, 2026.
