Local insurance agents may have been receiving calls from customers concerned with the recent increase in insurance premium taxes passed by the Frankfort Board of Commissioners at the end of last year.
The 3% increase, putting Frankfort’s insurance premium tax rate at 9% from it's long-held 6% rate, has raised more than a few questions about just exactly what this increase will be paying for.
This would mean that, according to information provided to The State-Journal, a policy that costs $1,000 annually would increase from $60 per year in premium tax to $90, an increase of 50%.
In the last commission meeting of 2022 on Dec. 20, City Manager Laura Hagg clarified that “the 1% for the fire station would be removed once the bonds are paid off. Once the bond is paid off for the Parks and Downtown master plan projects, we would remove that. It will not stay 9% forever, it will go down to 7%,” meaning the higher rate would be a temporary cost increase, and would revert to 7%, just one percentage point from the original 6% rate in place for many years.
In other words, the same $1,000 policy mentioned earlier would incur a $70 premium tax per year.
According to an email sent out by Mayor Layne Wilkerson and sent to The State Journal, “Frankfort has to have a good product if the city is going to be competitive with our surrounding communities in order to compete for residents, visitors and businesses.
“If our taxes/fees are too high comparatively, we may need to adjust downward to stay competitive,” he continued. “Conversely (and the reality for many years now) when our rate is low compared to neighboring cities, those cities will be able to make larger investments in their community amenities.
“In my opinion, this is one of the reasons Frankfort has been struggling to grow at all in the last several decades. The BOC is working hard to change that.”
Neighboring municipalities like Versailles and Lawrenceburg have increased their premium tax rates at least 8%, most higher, while Frankfort’s has held at 6% for several years.
“The result was a substantial imbalance in revenues between us and our neighbors, allowing them to build more amenities thus attracting more residents. Interestingly, our lower tax did not seem to make us more attractive during this time, as neighboring community growth rates have far outpaced ours,” the mayor said.
Concerns have also been raised that the premium tax increase is merely a way to pay for rehabilitation of the Broadway Bridge project, but of the 3% increase, only 1% would qualify to apply towards that project as one part of the larger Downtown revitalization master plan.
Due to this project still being in its infancy, there have not been any definitive plans created for the bridge project. The only project images released to this date have been the renderings posted on the city’s website and printed several times in The State Journal.
“I want us to all be clear that the insurance premium tax is not tied to only one project,” Wilkerson wrote. “Frankfort is in need of major investments in our amenities and services in order to compete going forward.”
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(1) comment
When you say the tax increase is 3%, that is misleading. The tax goes from 6% to 9% - that's a 50% increase, quite a large increase in this time of high inflation caused by over-spending by our government. Look out for a recession.
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