Ky. Ordinance to Levy 8 Percent Insurance Tax, But Legality of Meeting Questioned

Clark County, Ky. residents are facing an ordinance that would impose an 8 percent tax on all insurance premiums, excluding health insurance. The vote is believed to be the largest tax increase in Clark County history. Magistrates in Clark County Fiscal Court, by a seven-to-one vote, approved the ordinance at first reading.

But, the latest development in the controversy is the fact that the magistrates could have met illegally to talk about the tax before their regular meeting, officials say. State law requires 24 hours’ notice for special meetings.

The second and final reading of the ordinance was expected at a Jan. 26 fiscal court meeting. In addition to the 8 percent tax, which the county will receive in quarterly installments beginning in October, insurance companies will also charge a 1.2 percent collection fee to the cost of insurance policies, except health insurance. That means people living outside the city limits will actually pay a 9.2 percent tax on all insurance premiums. Residents living in Winchester already pay an 8 percent insurance tax and will not be affected by the ordinance.

The new tax was proposed due to a Clark County budget deficit that ballooned from $600,000 last summer to $1.1 million this year. Even supporters of the tax, however, told the Winchester Sun that even an 8 percent tax on insurance premiums might not be enough to meet 2005-2006 fiscal deficits.

Judge/Executive John Myers called a special meeting to discuss the ordinance the morning before the vote was taken. Fifth District Magistrate Pam Blackburn did not attend the meeting, claiming it was illegal because the public had not been given 24-hours’ notice. Blackburn cast the only negative vote, declaring that neither she nor the public had been sufficiently informed about the proposed insurance tax prior to the vote.

Concerns voiced by several local business owners, who said the tax would dramatically increase their cost of doing business and be a huge financial burden, were ignored. Several people commented that the tax would cause more people to drop their automobile insurance or switch from full coverage to basic liability to save money.

Topics Kentucky