BY GREGORY A. HALL
The Cincinnati Enquirer
FORT THOMAS -- The pressure on legislators for tax relief is colliding with school budgets at the polls this fall.
Kentucky voters will decide on amending the state constitution so legislators can exempt personal property, such as cars, from any or part of the property tax.
Personal property includes cars and intangibles such as mortgages. Approving the amendment would mean the General Assembly could tax personal property at any rate or eliminate taxing it altogether. The problem is that schools are funded through property taxes. While schools receive the bulk of their funding from property taxes on homes and businesses, a piece comes from the automobile tax. Fort Thomas Superintendent Larry Stinson said what happens with the amendment doesn't matter so long as schools are protected. "We have to have the revenue it generates (be) replaced in some equal fashion," he said. "It's a very important revenue source." Six percent of his district's roughly $10.3 million budget comes from property taxes on cars. All personal property, cars included, makes up 8 percent of the budget. In other terms, personal property tax revenues equal 17 teaching positions.
Schools get more than half of the car tax, said Campbell County Clerk Jack Snodgrass. The rest is split between services such as libraries, fire districts, cities, extension services and the Transit Authority of Northern Kentucky.
Proponents say the legislature can be trusted to reduce taxes without harming schools. Others aren't so sure.
"I think we need to be a little bit careful," Kenton Judge-executive Rodney "Biz" Cain said during the State of Northern Kentucky Address a couple weeks ago.
Kentucky's constitution requires all property to be taxed at its fair market value, with few exceptions. The amendment would add more discretion on personal property.
"That doesn't necessarily mean that people are going to be voting themselves a decrease in taxes," said state Sen. Jack Westwood, R-Erlanger.
However, he admitted pressure on legislators for a tax cut would only be more intense if the amendment passes.
"I don't think there's any question that Kentucky is taxed higher than most states in the South," he said. He hopes schools wouldn't be harmed by any tax cut.
"Obviously none of us wants that to happen," he said. "But other states support schools and they don't have the high taxes that we do."
He suggested cutting other parts of state government to make up for what the schools would lose or eliminating only state government's share of the personal property taxes.
"I wouldn't want it to be the schools," he said.
Although people asking for tax relief is common, the amendment has attracted little attention so far.
"There seems still to be some confusion as to exactly what is or is not being proposed," said Mr. Stinson, who is head of the Northern Kentucky superintendent's group.
Gov. Paul Patton was caught by surprise when asked about the tax question during a recent appearance in Northern Kentucky. He gave the amendment a tepid endorsement, saying he was worried about how a change would impact school revenue.
"I trust the General Assembly to make the right decisions," he said.
Campbell Judge-executive Ken Paul also endorsed the proposal. "I think it's going to be an important amendment," he said. "Hopefully it will pass."
Northern Kentucky's strong economy should insulate local government projects from being hurt if some property is exempted from the tax.
But former Boone Judge-executive Ken Lucas also expressed concern about the potential impact on schools.
That concern echoes with school officials.
"I guess it's one thing to try to respond to public outcry and dissatisfaction with tax rates," Mr. Stinson said. "You hate to say, "There's no free lunch.' That's such a tired phrase; but those quality services are not free. They have to be paid for in some fashion."
On the ballot
Here's the text of of the Constitutional Amendment question:
Are you in favor of amending Section 170 of the Constitution of Kentucky to permit the General Assembly to exempt motor vehicles and any other class of personal property from the levy of all or any portion of the property tax and to extend the homestead property tax exemption to persons who are classified as totally disabled by any public or private retirement system?
