Extension Office tax rates increase; Hike goes into effect despite fiscal court rejection

Published 9:00 am Wednesday, October 4, 2023

By Fiona Morgan


The Fiscal Court voted to deny the Boyle County-UK Extension Office’s new tax rates at a special-called meeting on Aug. 29. However, since the rates are set by the Department of Local Government, the rates went into effect anyway.

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Magistrates Jamey Gay and Paula Bodner voted yes, and the other four magistrates voted no. The new rates, which went into effect despite the court’s rejection, are 9.0 for real property; 21.27 for personal property; and 1.3 for motor vehicles. A rate of 9.0 means that $90 for every $100,000 would be taxed.

Most local agencies use compensating tax rates, which change based on how property values change. Since assessed values on real and personal property have recently increased, compensating tax rates have been decreasing so governments take in the same or similar amount of money.

However, this year’s Extension Office rates are higher than the actual compensating rate would be. Last year, the Extension District’s rate for real property was 8.3, and this year it will go up to 9.0. Judge-Executive Trille Bottom said the actual compensating rate would be 7.7, not 9.0.

At the Fiscal Court meeting on August 22, the court denied those new rates in hopes that the extension board would take the actual compensating rate.

Rita Stewart, area extension director for 10 counties, explained in the August 29 meeting that the Extension Office doesn’t calculate the rates. The Department of Local Government determines the tax rates, and the Extension Office Board chooses whether to approve them or opt for a different rate.

Board members voted to take the compensating rate that the DLG presented for them. Tax rates are based on county assessment information that comes from the Department of Revenue.

Magistrate Jason Cullen pointed out that the board could have chosen a lower rate, but decided not to. He said most other government agencies’ compensating rates have gone down.

“Every other entity in this county has opted to go lower, but for some reason the Extension Office has gone up,” Cullen said. “Our magistrates association has a call into DLG to understand it, because it doesn’t make any sense.”

The real property and the personal property tax rates for the Extension District have been steadily increasing over the years. In 2017, their real estate rate was 4.23, and the personal property tax was 9.21. Between 2017 and 2023, those rates have more than doubled.

Bottom said the property assessments times this year’s extension tax rate adds up to just under $300,000 more spendable money for the district than in 2022. However, Stewart said they have to factor in delinquency and subtract some numbers.

Stewart said the actual projected revenue difference is $147,000. They do a 5% delinquency rate, and a 4.5% collection rate, and when they figure those out, they will bring in an estimated $147,000 more this year than in 2022.

Extension Board Representative Ben Guerrant said the board decided to use extra revenue for debt repayments on a capital building project. The Extension Office recently made a building expansion and renovation.

“We’ve got a building with debt service; we owe about $4 million and there’s a 10-year plan,” Guerrant said. “Part of that 10-year plan is to attack that debt such that we don’t have to pay interest beyond 10 years. The way the debt service was set up through KACo is that we can pay early but we cannot pay the principal off within that first 10 year period, so we have to pay on it for 10 years.”

Their goal is to pay the loan in 10 years, to avoid any early payment penalties, and to have less interest payments, which saves taxpayer money. Once they hit the 10-year mark after the October 20, 2029 payment, they’ll pay off the balance of $2.86 million.

“It’s a long game and it may not be a popular thing because the rates have gone up a little bit, but at the end of the day we’ll be saving taxpayers $533,000 in interest expense alone.”

Magistrate Tom Ellis said having an increased tax rate, even for the purpose of debt payments, increases the high bar and makes it easier to possibly increase rates more every year.

A recently passed law made it so that special taxing districts have to present their new rates each year to local governments. Ellis said this is the first year that the law is in effect.

“In the history of special taxing districts, there has never been a provision in the statute that these folks have to come before us and make a presentation; there has never been the opportunity for this type of 40-minute conversation that we have had,” Ellis said. “Taxpayers, you need to know that we do not have the right to deny this.”

Cullen said for some of the tax rates, the Extension Office is taking in more money than the county takes based on their rates.

“If we’re taking 6 cents for every hundred dollars, and you guys are taking 9 cents, there’s a difference there, where more money is going into the Extension Office than the county,” Cullen said.

County Attorney Chris Herron explained that the Extension Office has been using substitute rates. He said compensating rates give a rough estimate of how much money it will bring in, and when those aren’t accurate, agencies use a substituting rate.

Herron said the Extension Office’s real and tangible property rates have been set too far apart from each other, to where they have to end up using substituting rates. He said they need to know what the plan is to get the real and personal property rates closer together, otherwise the substituting rate will keep kicking in.

Stewart said they can have a conversation with extension board members and UK to get those rates closer together.

Guerrant said the rates and the new law on presenting to the court have been a learning curve for the board, and they’re willing to work with the court on this and other issues, so they can all do what’s best for the taxpayers.

In the last fiscal year, the Extension Office made 111,594 contacts, and contributed 9,271 hours of instruction and activity to those using the Extension Office, according to Guerrant.

Alethea Bruzek from the Boyle County UK Extension Office said that from January to July 2023, there have been 280 different meetings and events held at the office. The facility has been used by 5,169 people in this timeframe, and are used for educational purposes only.

All meetings/events that take place here have some sort of educational component to them. There were 13 different events held at the Extension Office by Non-Extension Partner Groups, and 265 events by Extension Partner Groups.

The Extension District Board is a group of Boyle County residents including the county judge executive. For more information from the Department of Local Government, go to kydlgweb.ky.gov.