This article was first published in Volume 1, Issue 4 of the Owensboro Times newspaper.
When Owensboro and Daviess County leaders raised insurance premium taxes to help fund the $80 million downtown revitalization project more than a decade ago, they were making one of the most consequential financial decisions in local history. The move fueled construction of the Owensboro Convention Center and Smothers Park, but it also left both governments charting different paths for how to use the tax in the years since.
Those paths matter even more today as property values continue to rise and insurance companies warn of higher rates tied to natural disasters nationwide. Finance officials say that while residents may not always notice the tax — since premiums are often paid through escrow accounts — the combination of climbing values and looming rate hikes makes it increasingly visible.
Currently, the City of Owensboro maintains a 10% insurance premium license fee, with much of the revenue dedicated to long-term bonds tied to the downtown project. Daviess County, meanwhile, has adjusted its levy to 6%, a change made in 2024 to sustain its volunteer fire system after eliminating flat dues on property tax bills.
City Finance Director Angela Waninger said Owensboro had long collected 4% for its general fund before the downtown plan was launched. Leaders added another 4% in 2009 and 2010 to fund the project, while Daviess County pledged $20 million and exempted health insurance from its own base.
“The original estimate for the convention center was about $21 million, and the County’s pledge was enough to nearly cover that,” Waninger said. “But costs quickly rose, and the project ended up at $55 million just for the Convention Center, and $100 million for the overall downtown plan. That meant the City had to take on a much larger share.”
Because the City later joined the County in exempting health insurance from the tax base, its revenues fell short of original projections, Waninger said. Combined with higher costs, she said that forced officials to issue 30-year bonds instead of the 20-year bonds they had intended. Those bonds run through fiscal year 2043.
“Our total debt service per year is about $4.3 million to $4.4 million,” Waninger said. “We’ve refinanced twice at lower interest rates, which has helped. And because insurance premiums have trended higher, we fully expect to pay the bonds off early.”
Waninger said the trade-off has been worth it.
“By the City doing this, we have increased private investment by over $200 million downtown,” she said. “Smothers Park was named the No. 1 playground in the world. People come for Friday After 5, for the hotels, for the air shows, and fireworks. From a tourism and economic development standpoint, it truly did revitalize the City’s downtown.”
The County’s experience has been different and slightly more complicated.
Daviess County first levied a 4.9% insurance premium tax in 1973 to fund paid fire departments. In 2009, Fiscal Court added another 4% dedicated to the downtown project, bringing the total to 8.9%.
By 2020, County Treasurer Jordan Johnson said, the County realized that if the extra 4% stayed in place, it would collect more than was needed for the downtown bonds. Because state law only allows IPT changes once a year on July 1 — with 100 days’ advance notice — Fiscal Court acted to avoid over-collection.
In 2021, the County rolled the additional 4% back to 2.3%, resulting in a total IPT of 7.2%. The following year, the other 2.3% was removed entirely, returning the rate to the original 4.9%.
But by 2023, County leaders were confronting a different problem: the financial strain of maintaining the volunteer fire system. Since 2003, those stations had been funded by flat dues placed on property tax bills. Johnson said the dues had never been adjusted, and while costs for trucks and rescue equipment soared, growth in some districts stalled.
“Stations in areas of little to moderate growth would soon be unable to sustain themselves financially,” Johnson said. “The required subsidy of Fiscal Court to fund the volunteer system from general fund dollars was cost-prohibitive.”
The fix was what Johnson called a “repeal-and-replacement plan.” Fire dues were eliminated from tax bills effective January 1, 2024, and the IPT was raised to 6% effective July 1, 2024.
“The impact for most citizens should have been one-to-one,” Johnson said. “This method more fairly allocated the tax burden for fire protection, because it ties revenue to the value of insured assets rather than flat fees. Larger commercial structures that require more resources to protect now contribute more proportionally, while residential customers are less likely to feel much change.”
Both Johnson and Waninger emphasized that the City and County rates are separate and do not stack — residents pay either the City or the County rate depending on where they live.
While the City continues to pay down bonds tied to its downtown revitalization and the County uses its IPT to keep volunteer fire stations viable, both governments say the tax has become a cornerstone of local finance. For residents, that means a levy born out of downtown development is now equally tied to future public safety — and one that could become more noticeable as insurance costs climb.
