With a March 23 deadline looming, the Georgetown City Council is expected to vote on a possible tax increase on insurance premiums during Monday’s regular meeting.
The meeting will be held at 6 p.m. Monday and can be seen via the city’s YouTube channel.
During its last meeting the council held first reading on an ordinance to increase the tax on insurance premiums from five percent to eight percent. If the proposal passes, taxes on insurance premiums — automobile, property, etc. — will increase from its current rate of $50 per $1,000 of insurance to $80 per $1,000 of insurance. The tax increase would go into effect July 1, 2021.
The insurance premium tax increase would generate about $2 million in additional revenue, much of which would be used to give pay raises to first responders, city officials said.
The council is about to start working on its 2021-22 fiscal year budget, which begins July 1, 2021. In order to be able to include the revenue from the insurance premium tax hike in that budget, the state Department of Insurance must be notified no later than March 23.
If approved, the insurance premium tax hike would be the second significant move made by the council in recent months to address first responder salary discrepancies and manpower shortages uncovered through a comparison study of Georgetown with 18 peer cities. The study was conducted and released by the city early last year before the pandemic. Since then, parts of the study have been updated and include additional cities.
The study showed Georgetown’s insurance premium tax was less than half similar size cities, and the average rate was 8.19 percent. Nine cities, including Paris, Nicholasville and Sadieville, have a 10 percent insurance premium tax, city officials said. The study showed Georgetown’s salaries for police, fire, dispatch and public works were less than those peer cities, creating turnover and hindering the city’s ability to hire. The study showed those departments were not adequately staffed based upon population and according to national agencies that monitor first responder departments.
Last fall, the council imposed a 911 fee to fund the emergency dispatch department, which is an inter-local agency funded with the Scott County Fiscal Court. The revenue from the 911 fee replaces funding from the city’s general fund accounts and enabled the city to provide $5,000 annual raises to its first responders. Even with that pay increase, the city remains below what nearby cities are paying first responders, according to city officials.
The county has not imposed a 911 fee for its share of the emergency dispatch department.
During the last council meeting, Mayor Tom Prather shared a plan to eventually increase the starting pay for police and fire personnel to $49,500 annually and to hire additional personnel over a five-year period. In order to do that, the city must increase its total revenue as much as $6 million annually, he said.
The city is also looking at transitioning from a net profits tax for businesses to a gross receipts tax. Prather said that more education and explanation would be necessary before that decision is made and there is no immediate timeline for such legislation.
Mike Scogin can be reached at email@example.com.