Politics & Government

Council gives tentative approval to increase Lexington's franchise fees, property taxes

Lexington Herald-Leader

Lexington's Urban County Council on Tuesday gave tentative approval to increasing franchise fees on gas and electric utility bills by 1 percent and to a slight increase of some property taxes.

The franchise fee is the fee that local governments assess on utility bills.

The money — projected to be an extra $1 to $2 each month for a household that gets a bill of $100 to $200 each month — will go into the city's general fund, which will subsidize the street light program. Currently, installation and maintenance of street lights is funded through a property tax assessment, which has not been sufficient to cover the costs. The city has a backlog of 400 to 500 streetlights that need to be installed, said Urban County Finance Commissioner Bill O'Mara.

The franchise fee increase was included in Mayor Jim Gray's proposed 2014 budget and is projected to bring the city approximately $4 million each year.

O'Mara said the rationale for the increase "is that street lights are basically a public safety issue." He said the franchise fees cover street lights in common areas and major arteries that people travel even if they don't live on them. The issue had been tabled since June.

Gray had said in his budget address in April that the alternative to the franchise fee increase was cutting streetlights and other services.

Also on Tuesday, the council gave tentative approval to an increase of property taxes for street cleaning.

In April, Gray had said his budget included no broad based tax increases.

Gray's spokeswoman Susan Straub said Wednesday that the "small increase in the street sweeping tax rate is not something we proposed, but it is an option we offered at the Council's direction."

The current rate for street sweeping property taxes is .0094 per $100. The new rate would be .0097 per $100, a 2.8 percent increase, O'Mara said.

O'Mara said property taxes would pay for the operating costs of street cleaning. He said the city is barely breaking even on that front now.

A homeowner who is receiving street cleaning services from the city and who is living in a home costing $165,000 is currently paying $15.51 annually for their street cleaning. Under the proposed increase, that same homeowner would pay $15.95 each year, he said.

Since 1983, the city's Urban Services Fund property tax rates ... streetlights, garbage pick up, street sweeping, have only been rolled back, not increased, said Gray spokeswoman Susan Straub.

For street sweeping, the rate was last reduced from .0095 to .0094 in 1990, where it has stayed since, Straub said.

The other property tax increases tentatively approved Tuesday by the council were requested by special taxing district boards, city officials said.

The Fayette County Extension District board, which is appointed by the mayor, oversees a joint program of the University of Kentucky and Kentucky State University that educates people in agriculture and natural resources, family consumer science, horticulture, 4-H Youth Development, and economic development. The board had recommended that the council approve a 4 percent increase which takes that rate from .0033 to .0034. For a homeowner owning a $165,000 home, the increase would be $.17 per year, O'Mara said.

The Agricultural Extension District also took an increase in property taxes in 2013, going from .0032 in 2012 to .0033 in 2013, Straub said.

Extension Agent Nick Carter said Wednesday that the district had suffered from federal budget cuts.

The Soil and Water Conservation District board had also requested an increase which the council tentatively approved Tuesday. That rate went from .0004 to .0005, which would also be a 17 cent increase each year for a homeowner with a $165,000 home.

The council will vote on giving the 2014 proposed increases a first reading Thursday and a final approval vote Aug. 29.