Newport proposes lower real property tax for 2023-2024 rate

Haley Parnell
Haley Parnell
Haley is a reporter for LINK nky. Email her at [email protected]

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The city of Newport heard a first reading of its 2023 ad valorem tax rate Monday with a proposal to lower its property tax rate and keep its personal property rate the same.

An ad valorem tax is based on an item’s assessed value, such as real estate or personal property. The proposed rate will exceed the compensating tax rate ($2.50 per $1,000) by levying a real property tax rate of $2.60 per $1000 of valuation, down from the 2022 rate of $2.74 and a personal property tax rate of $2.74 per $1,000, which stayed consistent to last year’s rate.

Personal property is anything you can move and is owned. Real property cannot be moved, and is anything attached to land. According to the city, the excess revenue generated will be utilized for general fund expenses.

“Regarding personal property—not adjusting that rate, revenue that comes off of that is relatively small, and I think it’s important to note that our bond rating improved to the point where we were able to get financing for some of these projects,” Newport Mayor Tom Guidugli Jr. said. “The bonding component was critical to our match on some of these projects, and getting our bonding in line by doing the plus four (compensating rate) each year has improved our rating to where our financing costs have gotten to the lowest we’re able to achieve.”

Newport City Manager Tom Fromme said he always recommends a 4% compensation rate because they hadn’t taken the plus four years ago and got knocked on their credit.

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Should property values go up, then the compensation rate would go down. If a city exceeds a 4% compensating rate, citizens can file a petition to get a referendum to reduce the tax rate back to what it was.

During the meeting, Fromme gave some examples of what residents would pay in taxes under the new rate. Under the previous rate of $2.74, someone owning a home valued at $100,000 would pay $274 in property taxes; under the proposed rate, it would be $260. For someone owning a $300,000 property, taxes would go from $822 to $780.

“I think it’s very important for folks to take away at home that we’re actually going to lower taxes, and when you see all the different articles that have come out about different municipalities in our area and what they’re doing this is very encouraging for families who are struggling to get by with the high inflation that we have today,” Newport Commissioner Mike Radwanski said.

Fromme said the city also doesn’t have a special fire district tax, which helps to keep its rate down. He said some municipalities have a fire district tax that ranges between $1.50 and $2 and said it would almost double their property tax revenue if they had the tax.

“We’re almost at a competitive disadvantage as a municipality because we’re forbidden by Kentucky statutes, so we have to fully fund the fire department out of our general fund revenues,” Fromme said.

He also said that the city receives no benefit from sales tax and has a limited amount of areas where they can raise revenue, and property tax is one of them.

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“There are millions of dollars of sales tax generated in Newport every year, but it’s all shipped to Frankfort,” Fromme said.

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