By Gage Wilson
For Glasgow News 1
Property tax discussions were the highlight during the Glasgow City Council Finance Committee’s August meeting, though committee members stopped short of recommending a rate to give time for additional guidance from the Kentucky Department for Local Government.
City Treasurer Victoria Simmons led much of the meeting, with committee Chairman Terry Bunnell and Councilwoman Chasity Lowery participating remotely via Zoom.
Glasgow’s current property tax rate is 16.5 cents per $100 of assessed value. Based on this year’s assessments, the city’s compensating rate would fall to 16.2 cents per $100.
Generally, Kentucky’s compensating rate is intended to generate approximately the same amount of revenue from existing property as the previous year, excluding new property added to the tax rolls. The rate can decrease when property assessments grow because the same amount of revenue can be collected across a larger tax base.
Simmons said Glasgow saw approximately $5 million in growth this year, down from roughly $11 million the previous year. Coupled with a decline in tangible property values, that difference means the 16.2-cent compensating rate would actually generate slightly less revenue than the city collected last year.
That opens the door for what the Department for Local Government refers to as a “substitute rate.”
DLG uses the substitute rate when the initial compensating-rate calculation would not produce the minimum amount of revenue allowed because of changes in the property tax base. For Glasgow, that rate would be 16.4 cents per $100 of assessed value, still one-tenth of a cent below the city’s current rate, while bringing collections more in line with the previous year.
The option appears to be new territory for Glasgow. Simmons said she searched previous tax records for a comparable year in which the city had faced the same situation but was unable to find one.
Despite the difference between the two rates, Simmons said both would generate more than $2 million in projected property tax revenue and exceed what the city anticipated when its current budget was adopted.
At the 16.2-cent compensating rate, the city is projected to collect $2,096,289, while the 16.4-cent substitute rate would generate $2,122,169 — a difference of $25,880.
“It is encouraging because both the compensating rate and the substitute rate will both exceed our budgeted number,” Simmons said.
Simmons also briefly discussed a 4-percent increase rate, which would be 17 cents per $100. Under Kentucky’s property tax system, that rate is calculated to generate approximately four percent more revenue from existing real property than the compensating rate. The committee, however, was not considering recommending that option to the full council.
Rather than settle on a recommendation Tuesday, Simmons and Bunnell agreed it would be better to wait for additional correspondence from Department for Local Government to clarify the city’s options before taking a proposed rate to the Glasgow City Council.
The committee also heard from Rob Campbell, a representative of engineering firm Qk4, regarding the Johnson Farm property and the city’s continuing effort to attract retail, commercial and residential development there.
Campbell reiterated that the city has structured its offering to provide an incentive for developers interested in the property by delaying when they would have to pay for the land.
“We set up the contract so that the developer doesn’t have to pay for the property immediately,” Campbell said. “Two years for retail and commercial and four years for residential.”
Campbell compared the arrangement to incentives offered through Industrial Revenue Bonds, with the city using the terms of the property transaction to make development more attractive rather than simply selling the land outright.
He expressed optimism about the latest Request for Proposals for the property, while Bunnell stressed that the city would consider more than the amount of money a prospective developer is willing to pay.
Having the money to purchase a tract, he said, would not necessarily be enough if the proposed development did not fit what the city wants for the property.
“It’s not just the right price, it’s the right plan,” Bunnell said.
The Glasgow Finance Committee is scheduled to meet again Sept. 15.
Key Facts
• Glasgow’s current property tax rate is 16.5 cents per $100 of assessed value.
• The compensating rate for this year would be 16.2 cents per $100.
• A “substitute rate” option would be 16.4 cents per $100, still below the current rate.
• Both proposed rates are projected to generate more than $2 million in property tax revenue.
• The difference between the compensating and substitute rates is about $25,880 in projected revenue.
• The committee delayed a recommendation while awaiting guidance from the Kentucky Department for Local Government.
• Officials also reviewed incentive-based plans to spur development on the 162-acre Johnson Farm property.
• The Glasgow Finance Committee is scheduled to meet again Sept. 15.
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