Tax digest up only a fraction of previous years; county plans no property tax hike

As expected, the slowdown in new construction and the lowering of home values in Fayette County have led to a major hit on the county’s tax digest.

In previous years the county had tax digest increases of over $300 million annually as residential and commercial growth boomed. But the economy has decimated that figure to just a $26 million increase this year, county officials reported last week.

Some entire subdivisions have seen housing values drop as county assessors calculate the impact of multiple foreclosed homes in those subdivisions, Fayette County Manager Jack Krakeel told the County Commission last week.

Some banks are offering deep discounts on homes, as much as 50 percent in some cases, to get them sold, he said.

Despite the drastic change in the tax digest, the county is not planning to enact a millage rate increase. Instead the plan is to keep the millage rate the same, even though it will bring in less money than last year, said Finance Director Mary Holland.

Krakeel asked Holland if she felt the millage rate would bring enough revenue to cover the county budget as proposed. She said it would, but with a caveat.

“We have to watch the budget very closely on the expenditure side,” Holland said. “... There is no room for fluctuation in the budget as you know.”

The commission is scheduled to vote on the millage rate, which affects all property tax bills, on Aug. 27 at 7 p.m. during its regular meeting.

Another issue affecting home values is the legislature-imposed freeze on property tax reassessments for the next three years, Krakeel said.

“The only way a property’s value can go up is if it is sold or if substantial improvements are made” such as an addition to the home.

Commission Chairman Jack Smith said he was curious how much of the county’s tax digest decline was due to a change in how fair market value is calculated.

Smith said the county now must include sales of foreclosures when calculating fair market value instead of how those values previously were thrown out of the equation because they were not “at arm’s length.”