Fiscal Court may lower insurance tax

Messenger-Inquirer (Owensboro, KY)

Jan. 26—In 2010, Daviess Fiscal Court sold $20 million worth of bonds to pay its share of the cost of the Owensboro Convention Center.

It was a controversial decision, unpopular with many property owners at the time.

And Fiscal Court members promised to eliminate that part of the tax once the debt was paid in 2030.

In 2014, Fiscal Court refinanced the bonds to save more than $2 million and retire the debt six years early — in 2024.

And now, it is preparing to retire the debt even earlier — next year.

Judge-Executive Al Mattingly said Monday that the court will hear first reading at 4 p.m. Tuesday, Jan. 26, of an ordinance to reduce the tax rate on insurance premiums for property outside the city limits of Owensboro and Whitesville from 8.9% to 7.2%, effective July 1.

And he expects the rate to drop back to 4.9% next year when the bonds are paid off.

"If we leave the rate as it is," Mattingly said, "we'll over-collect this year."

Fiscal Court created the 4.9% tax on insurance premiums in 1973 to help pay for a system of volunteer fire department stations across the county.

In 2010, it raised the tax to 8.9% to pay off the money it borrowed for the convention center with the understanding that that part of the tax would come off once the debt was paid.

Mattingly said Fiscal Court members will vote on the plan at its Feb. 18 meeting.

In 2014, Fiscal Court was hoping for an interest rate of at least 2.4% — down from the 3.28% it was paying then — when it refinanced the bonds sold in 2010.

But it actually got a 1.8% rate.

Also that year, Fiscal Court paid another $500,000 on the principal portion of the loan.

The insurance premium tax was selected to help fund the downtown development because it hits a broader cross-section of the population than the occupational or property taxes.

Health insurance was exempted from the tax, however.

The city also increased its insurance premium tax rate from 4% to 8% at the same time.

The county's decision to pay off its debt early does not affect property inside the city limits of Owensboro and Whitesville.

Owensboro residents will be paying the increased rate for another two decades.

City Manager Nate Pagan said the city sold 30-year bonds, rather than 20-year bonds, in 2012 and 2013.

The original total principal of the two bonds was $57,100,000.

That means part of them will be paid off in June of 2042 and the rest in May of 2043.

The total principal on the bonds was $57.1 million, he said.

The 169,000-square-foot convention center wound up costing $39.5 million.

It opened on Jan. 31, 2014.

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