By Patricia A. Scheyer
NKyTribune reporter
Ft. Wright city council gave the green light to City Attorney Tim Theissen this week to look into possible grounds to file a lawsuit against the state of Kentucky for unfair application of the law.
At its regular city council meeting, Mayor Dave Hatter apologized to residents of his city.
“First off, to everyone out there at home, I want to apologize personally for telling you that we were going to do this thing, and you were going to get this tax reduction,” he said. “Which you’re not, now for another year because of this ridiculous feed back from the state. So again, this is completely ludicrous, which is why I am seriously asking you to give myself, through Tim, the permission to at least look into suing over this.”
He explained that this fall the city has been trying to see where they can cut taxes in an increased effort to put money back into the pockets of residents. First of all, they cut the property tax 6.5 percent and personal tax a little over 7 percent in September. The very next month, council voted to eliminate the motor vehicle tax, which is currently at $.1977 per $100 of assessed value.
The city officials knew that there was enough red tape associated with this decision at the state level that the residents wouldn’t see the cessation of tax until next year, but they had no idea of the quagmire of rules that they would very quickly discover.
“The state came back to us and said, Ah, wait a minute, you can’t do that— A, you have missed the deadline, and B, through some sort of super stupid silly BS that they came up with, you can’t do that,” said Hatter. “The timing of it with the October first (deadline), that’s on us for unfortunately not realizing that if we didn’t get it in before then that they would say you can’t change it for a whole year anyway. The whole thing just doesn’t make any sense. It almost reaches the scale of ‘pension’ level incompetence and ridiculousness.”
Attorney Theissen tried to explain the rules that were told to them by the Kentucky Finance Cabinet.
“We are one of five cities out of 19 in Kenton County that has a motor vehicle tax being charged through the county clerk’s office funding the city,” he said. “One of five.”
Even though 14 out of the 19 cities in Kenton County do not have a motor vehicle tax, there is no penalty for them, but the five cities who have a motor vehicle tax cannot legally do away with the tax in the state of Kentucky.
“This is a very important part of why I think we should sue over this,” Hatter interjected. “Nineteen cities, fourteen have don’t have this, five do, we want to get rid of it, they say no you can’t. What? What about the other fourteen?”
Theissen said that 273 of the 407 cities in the Commonwealth don’t have a motor vehicle tax, making cities like Ft. Wright in the minority.
“Our constitution says you’re not allowed to exempt certain properties from tax,” he explained. “The theory behind that being that as a Commonwealth we wanted to equally divide tax among or on all assets and not only on certain assets, so if you have one resident who owns a bunch of real estate and another who owns a bunch of motor vehicles, we’re going to tax them both. That’s the idea.”
Theissen explained that the Kentucky Finance Cabinet rejected the city’s ordinance eliminating the motor vehicle tax, because it seemed to exempt property, and told him they won’t enforce it.
“There is no changing their minds, I can tell you that,” said Theissen.
If a city doesn’t have the tax, he said the Finance Cabinet will not get involved in forcing them to impose the tax, but they won’t let any city repeal the tax.
The Finance Cabinet did tell them they could reduce the tax, but not too much.
Theissen told council that the ordinance he had drawn up would basically undo the ordinance passed in November which repealed the motor vehicle tax. It would allow the current motor vehicle tax to go on as usual, so residents will have to continue to pay the current motor vehicle tax, but the new ordinance will also reduce the tax for 2024 to two cents, which is the lowest the state will allow.
“You can’t uncharge the tax for 2023 so we have to charge the tax for one more year, but we can decide right now that we want to set the rate beginning 1-1-24 at two cents,” said Theissen.
“I am proposing ultimately that we do both, pass the ordinance, but also look into grounds for suing,” Hatter stated. “We need to say to them, ‘as someone who has been charging this you should be able to eliminate it entirely, or you should enforce it on everybody else’.”
One of the councilmembers asked if Senator Chris McDaniel could sponsor a bill to change the rules at state level, but Theissen said this is a constitutional issue, and they would have to change the constitution, which is not as easy.
Ultimately, even with Mayor Hatter’s witty one liners, sprinkled into the conversation to lighten the tension, councilmembers understood, and passed the first reading of the ordinance to repeal the old ordinance, keeping the motor vehicle tax the same rate for another year, and to change the motor vehicle tax to $.02 per $100 of assessed value for 2024.
To understand the difference, a car which is valued at $25,000 would have tax charged at $49.43 under the current rate. In 2024, with the considerable cut in the tax rate, the owner of a $25,000 car will only be charged $5.
Following the first reading, council then made a motion to allow Attorney Theissen to look into taking legal action against the state.
“So, again, I just want to apologize to folks; its really kind of embarrassing that we’re in this position,” said Hatter. “I will accept the responsibility for not doing enough homework on the front end of this to make sure we had all the ducks in the row and that there wouldn’t be some crazy thing like this come up. The intent was never to cut the tax and give people the false hope or impression that we were going to cut the tax and then put it back. We have a long track record of cutting taxes. But again I apologize, I feel really bad about this. It makes us look like buffoons, and I’m the king of buffoons. Again, I’m sorry, I don’t want to pay the tax either!”