Lexington is considering raising a property tax used to pay for street lights to address a $2 million deficit in that fund.
If approved, it’s likely some homeowners won’t notice. The average increase will likely be less than 50 cents a year.
The tax — which is only levied on property tax bills in certain taxing districts — is currently $38.85 for a $185,000 home. By increasing the amount four percent, the tax will increase 37 cents to $39.22 for a $185,000 home.
The increase would generate an additional $65,000 for the cash-strapped street lights fund, which gets about $5 million a year from property taxes. The city uses an additional $2 million from other funding sources to pay for new street lights and to repair and replace old ones.
The Lexington-Fayette Urban County Council voted 10 to 4 in favor of the 4 percent increase during a Tuesday council work session. That was the only property tax increase approved by the council during Tuesday’s meeting.
The council will hold a public hearing on the proposed tax increase at its Aug. 29 meeting, when it is expected to finalize the city’s property tax rates. Homeowners typically get their property tax bills in the fall. Those taxes are due in January.
The city has long struggled to figure out how to pay for street lights. The current tax never generates enough money to meet the need. In the past, the city raised franchise fees — a tax cities can levy on water, electric, cable and gas bills — to help pay for street lights. The last time the city adjusted the franchise fees to help pay for street lights was in 2013, city officials said during Tuesday’s meeting.
Council members who voted against the increase said the $65,000 in additional revenue the tax increase would generate is not enough to cover the deficit in the fund.
“It’s a $65,000 Band Aid on a $2 million problem,” said Councilman Preston Worley. He and others argued the city should look at other ways of plugging that deficit than raising a tax, however slight.
Councilman Richard Moloney said the city decided to raise its franchise fees to pay for street lights because both homeowners and renters alike pay utility bills. Not every homeowner is assessed the street light property tax. It depends on the taxing district.
“There are people paying a tax for street lights on New Circle Road where nobody lives,” Moloney said.
Still, council members who supported the increase said the impact on tax bills would be minimal. Councilman Bill Farmer Jr. said the number of requests from neighborhoods for new and better street lights has ramped up in recent years.
Those who voted against the street light tax increase: Moloney, Worley, Amanda Bledsoe, Josh McCurn and Chuck Ellinger.
Those who supported the increase: Jake Gibbs, Jennifer Reynolds, Susan Lamb, James Brown, Kathy Plomin, Jennifer Mossotti, Vice Mayor Steve Kay, Bill Farmer Jr., Fred Brown and Angela Evans.