Councilmembers will set the ad valorem tax rates for Fiscal Year 2025
In Tuesday’s Council Work Session, Councilmembers will decide how to set the ad valorem tax rates for Fiscal Year 2025.
Ad valorem taxes are property taxes, which are assessed on assets like homes and real estate, machinery, motor vehicles, boats, personal planes, or agricultural products.
Fayette County’s ad valorem taxes are split between multiple entities. Fayette County Public Schools gets the majority of ad valorem taxes (64.1% in FY 2024), while the rest are split between the State (9.1%), LexTran (4.7%), LFUCG’s General Fund (6.3%), LFUCG’s Urban Services Fund (14.1%), and other agencies (2.3%).
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Lexington’s Urban County Council can only set rates for the city’s General Fund, Urban Services Fund, Soil and Water Conservation, Extension Office, and Health Department; FCPS and the State of Kentucky set their own ad valorem tax rates.
In this meeting, Council will make two decisions: what tax rates to set for funding the General Fund, and what rates to set for the Urban Services Fund. For the General Fund, Council has the following three options:
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Option 1: Keep the rates the same as last year. Keeping the rates the same as last year will generate more revenue, largely due to higher property values.
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Option 2: Set a compensating rate that generates roughly the same revenue as last year. This year, this option would lower the rate, bringing in roughly the same amount of money as was generated last year.
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Option 3: Set rates that will raise 4% more revenue than last year. Kentucky state law allows cities to generate a maximum of 4% more revenue than the prior year through ad valorem taxes; if a city sets a rate that generates a revenue increase higher than 4%, that rate is subject to a recall vote from Lexington taxpayers.
The Mayor’s Administration is recommending Option 1. A tax bill for a $250,000 house in Lexington would pay $190 toward the General Fund under Option 1.
Republished from CivicLex.
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Adrian Paul Bryant is CivicLex’s Civic Information Specialist, reporting on City Hall meetings and local issues that affect Lexingtonians every day. Raised in Jackson County, Adrian is a lifelong Kentuckian who is now proud to call Lexington home.