Wilder city council increases tangible property tax rates after night of debate

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The Wilder City Council voted to increase the city’s tangible property tax rate after a night of tense exchange between council members and city staff on Monday.

The council meeting featured the second of two legally-required readings relating to proposed changes in the tax rate. Tangible property refers to property that can be moved between different locations and includes manufacturing equipment and machinery, office equipment and other inventory. Tangible property is distinct from real estate property, which is tied to a particular place. Real estate property includes houses and other buildings owned by residents as well as business facilities.

Based on documents received from a public records request, the tangible property tax rate from 2021 would have fallen short of budgeted tax revenue by over $200,000.

What’s more, some council members worried that the spike in property valuations would lead to higher taxes on households. Inflation and housing market booms have caused property values across the state to increase. As a result, property tax bills for some Kentucky residents have jumped up, even when tax rates have remained the same from last year. Some Campbell County residents saw their tax bills increase by as much as 50%, as reported by Link NKY.

Councilwoman Valerie Jones, who is challenging Mayor Robert Arnold in the upcoming election, leveled criticism at the mayoral administration for the shortfall. “To me, this was a pretty sizable over-estimation of these taxable revenues,” she said. “And I think that this miss is clearly the responsibility of the administration.”

She went on to say that Wilder residents should not be expected to cover the difference. She said that it was “clearly the responsibility of this council to figure out how to cover the shortfall that has now been created in the budget and not our taxpayers.”

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The Commonwealth of Kentucky requires local governments to pass budgets in June. However, the city did not receive property value assessments until August, meaning that tax revenue figures in the budget were speculative. Upon receiving local property valuations, the council saw that last year’s tax on tangible property would not bring in enough revenue to meet budget expectations.

Council members attributed the sudden drop in tangible tax revenue to the vacating of tangible property at the local TMK Ipsco Tubulars Inc. steel plant. Tenaris S.A., a company based in Luxembourg, acquired the plant in January 2020. Production stops and layoffs followed, depriving Wilder of one of its largest employers.

Jones expressed frustration at what she characterized as an oversight: “I have to question why didn’t someone at least ask, ‘Are you taking the equipment? Are you taking the inventory? Are you taking everything that’s considered tangible?’”

She also claimed, addressing residents in the audience, that even if real estate property tax rates didn’t increase, “your taxes are going up because the value of your properties have gone up.” She concluded by recommending that the council cover the shortfall by amending the budget to pull upon a capital surplus from the previous year.

City clerk and treasurer Juanita Schultz chided Jones, characterizing her comments as political opportunism.

“There’s a lot of misinformation going on here, and it’s all political,” Schultz said.

Schultz said that Wilder has one of the lowest property tax rates in the state and that Wilder, in contrast to other cities, gets most of its taxes not from residents but from businesses.

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“Seven percent out of our annual budget is from the residents’ property tax,” she said. “45% from payroll. What’s that tell you? We need our businesses. We need jobs.”

Some council members tried to offer alternatives. Councilwoman Kelly Meiser suggested taxing hotels in the city, but City Administrator Terry Vance pointed out that the city did not have the legal authority to set tax rates on hotels. That authority has instead been vested in the Kentucky Convention and Visitor Bureau.

Councilman Bob Blankenship suggested drawing upon American Rescue Plan Act (ARPA) funds, which the federal government issued to cities to help recover from the COVID-19 pandemic. Vance noted, however, that ARPA funds wouldn’t be able to cover shortfalls in the long run because they were one-time rescue payments that would not be replenished after being spent.

“What are we going to do next year?” he asked. The only sustainable solution in his view was to draw more businesses to the community to build out the tax base.

Arnold responded to the prospect of drawing upon surplus funds to cover the shortfall in tax revenue by referencing discussions about the issue he’d had with other city governments in Campbell County.

“Every one of them said you invest [surpluses] into the future of the city,” he said. “The onetime thing doesn’t last, and maybe you don’t have that money in the future.”

Jones responded that she had looked to cities outside of Kentucky for novel solutions, although she was not specific.

In the end, the council voted 4 to 2 to increase tangible property tax rates. Council members Bob Blankenship, Sandy Decker, Jim Profitt and Andrew Williams voted in favor. Council members Valerie Jones and Kelly Meiser voted against.

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As such, the real estate property tax rate will remain the same at 0.231%, and the tangible property tax will increase from 0.313% to 0.513%.

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