Garrard County Judge-Executive John Wilson said if the court had dropped the tax early, he fears the county would not have had enough money to make the last payments on the hospital debt, and it might have been too much for the county to bear. (Kendra Peek/kpeek@amnews.com)
LANCASTER — Despite getting the hospital debt paid off early, Garrard County taxpayers will not yet see a relief on their insurance premium taxes, the Fiscal Court said Monday. That is because of a Kentucky statute that only allows insurance premiums to be adjusted once a year, on July 1.
“I thought, ‘there’s no way this can be true,’” said Magistrate Joe Leavell, noting he called the Department of Insurance in Frankfort, which confirmed it couldn’t be dropped.
According to the statute, the Fiscal Court would have to pass an ordinance repealing the tax 100 days before July 1 and notify the Kentucky Department of Insurance.
The hospital went bankrupt and was forced to close in 2002, leaving the county with $4.5 million in debt, which had been borrowed from the Kentucky Association of Counties in order to remain open longer.
Magistrates promise they plan to reduce the taxes somehow, passing a motion Monday, which they hope will be seen as a sign of good faith that they will continue working toward a tax reduction. In fact, if Leavell has his way, the tax will be gone by July 1, 2013.
The method of reducing the tax will be up for debate. One of the easiest ways will be to remove the insurance premium tax; however, Magistrate Ronnie Lane doesn’t believe that is the fairest way to proceed. He wants to reduce all of the taxes in some way and would like the Fiscal Court to study and see which is the best method.
“It’s an idea worth looking at,” Judge-Executive John Wilson said. For now, the court is in “limbo,” he said, because nothing can be done to remove the tax until magistrates have had a chance to further discuss the matter.
The destination of that tax money also has not yet been determined because the Fiscal Court will have to amend the budget for the surplus of money.
For now, the money will go into the general fund, where, according to Leavell, it will need to be watched “like a hawk.”
Some questioned why this law wasn’t already discovered and the process completed this past July. However, according to Wilson, this would not have been an option.
“It would have been like hitting a moving target,” he said, explaining that it was too difficult to predict when the debt would have been paid off, as the income from the tax varied from month to month.
If the court had decided to drop the tax early, Wilson fears the county would not have had enough money to make the last payments, and it might have been too much for the county to bear.
“We would have been short if we had repealed,” he said.
