Kentucky lawmakers seek to resolve skyrocketing motor vehicle property tax dilemma

Kentucky lawmakers are working on an immediate solution to the state’s motor vehicle property tax, which is expected to rise significantly this year.

The increase is not due to an increase in the rate. Instead, it will come from much higher vehicle valuations, with 2022 valuations expected to be around 40% higher than 2021.

Last week, the Hopkins County Clerk’s Office posted on his Facebook page a Jan. 6 letter she received from the state Department of Revenue advising county clerks, who are responsible for collecting the tax, of the increase. The letter from state assessment director Cathy Thompson called the increases an “unprecedented” event.

The higher valuations were due to multiple factors, including reduced new car production, a lack of used cars available on the market, and increased dealer interest in used cars.

State Rep. Patrick Flannery, R-Olive Hill, said he anticipated this and introduced legislation in the 2021 session to stop it. This bill was never passed in committee.

He filed House Bill 6 Monday, which he said would address a “dirty secret” in how the state has rated vehicles for more than a decade.

The state constitution requires that all property be valued at “fair specie value, estimated at the price it would yield on a fair voluntary sale.” Flannery said the Department of Revenue in 2009 under the then government. Steve Beshear revised state policy for determining a vehicle’s value based on a “clean trade”.

According to NADAGuides.coma “clean exchange” means the car or truck being appraised “passes all necessary inspections with ease” and is free of mechanical defects with minimal wear.

This determination “means that the majority of automobile owners pay more taxes than the actual condition of the vehicle,” Flannery said.

HB6 would prohibit the state from using either “gross exchange” or “clean exchange” for assessments.

Also on Monday, State Senator Jimmy Higdon, R-Lebanon, filed Senate Bill 75which also deals with the issue of motor vehicle tax.

His bill provides for the use of a rateable value for vehicles from the previous year. For vehicles not assessed by the state within the previous year, the owner may complete the assessment at the county property assessment administrator’s office.

Higdon said he was disheartened to see the letter from the revenue department sent to county clerks.

“We have people facing a higher cost of living due to all the impacts of the coronavirus,” Higdon said. “They don’t deserve to have to pay more on this tax because of a situation beyond their control.”

Penny D. Jackson