The City of Fort Wright has hit a bump in the road in its effort to join 14 other cities in Kenton County that do not impose a motor vehicle tax on residents.
The motor vehicle tax rate in Fort Wright currently stands at 19 cents per $100. To put that figure in perspective, a $25,000 vehicle would be taxed $49.43 per year. Seeking to eliminate this for residents and make good on Mayor Dave Hatter’s challenge to the city, the city council passed an ordinance in November to repeal the city’s motor vehicle tax.
“City council is constantly evaluating our tax burden and is always working hard to keep more of your money in your pocket, especially now with inflation skyrocketing,” Hatter said in a letter to residents. “After reviewing our revenues and expenses and considering our substantial reserves, council thoughtfully decided that the city can run without the revenue generated by the vehicle tax.”
The ordinance was signed, sealed, and delivered to the Kenton County Clerk and Kentucky Finance Cabinet to stop the collection of the tax effective in 2023.
After kicking the tires on the ordinance, the Kentucky Finance Cabinet rejected the measure, citing that exemption from tax violates a provision of the Kentucky constitution.
The City of Fort Wright Attorney paid a visit to the Finance Cabinet on Nov. 28, 2022 to examine the state of the tax ordinance as well as the status of motor vehicle tax collection by other cities throughout Kentucky.
After doing a little digging, they found that only five cities in Kenton County charge motor vehicle tax to residents.
Hatter told residents that per an attorney for the finance cabinet “It was explained that the state has simply not pursued enforcement of the violation by the 134 cities in Kentucky who do not charge the tax. Legal action to challenge this illogical position is being considered by council, and council has authorized me to work with staff and our attorney to explore a lawsuit against the state on this matter. More information on litigation may follow.”
For now, the tax cannot be repealed, but it can be lowered.
A new ordinance effective Jan. 1, 2024 reduces the tax to two cents per $100, barring any city-initiated legislation. Using our previous example, a $25,000 vehicle in 2024 will be $5.00 per year whereas previously it would cost the owner $49.43.
Hatter said he feels remorse for the confusion surrounding the ordinances, but promises to continue to fight for the elimination of the tax.
“Council has tried to act in good faith on this matter and this is an unfortunate and embarrassing situation we find ourselves in due to the illogical and outrageous position the Kentucky Finance Cabinet has taken on this subject,” he said. “I accept full responsibility for and sincerely apologize for any confusion or inconvenience that we may have caused for you in this regard, and I can assure you that we will fight this and will continue to work hard to put more money back in your pocket while at the same time making Fort Wright a great, place to live, work and play.”
