Lexington council approves House Bill 44 (4%) ad valorem recommendation, schedules public hearing

The Lexington Fayette Urban County Council voted on Tuesday to set FY26 ad valorem tax rates using the House Bill 44 allowable 4% option for both the general services and urban services funds and scheduled a public hearing for Aug. 28, 2025.

The action follows a presentation from Director Luker on the statutory timeline for setting tax rates and three rate options: the compensating rate (maintains prior-year revenue for existing property), the House Bill 44 4% allowable increase, and higher ‘‘cost of service’’ options primarily discussed for urban services. Director Luker told the council the administration recommended the House Bill 44 (4%) option for both funds.

The administration said Lexington’s certified assessed real estate value rose 6% to $39.7 billion for FY26, exceeding the 4% assessment increase assumed in the adopted budget. Director Luker explained the city must set rates within 45 days of certification under state statute and reviewed how different options would affect household bills and revenue. She noted that most of a typical tax bill goes to entities outside city government and that the administration preferred the 4% option to balance revenue needs without exceeding the statutory 4% threshold for existing-property revenue.

Councilmember Brown moved multiple motions to set the general services and urban services rates at the administration’s Option 3 (House Bill 44 4% allowable), to set related special-district rates (public health and soil & water) as presented, and to place an ordinance on the Aug. 14 docket levying the taxes at those rates. The motions were seconded and approved by voice vote. Council also voted to schedule the required public hearing on all ad valorem rates for the Aug. 28, 2025 council meeting at 6 p.m.

Council members asked questions about refuse (urban services) funding, landfill fees, a pending waste-hauling contract, and a planned waste-efficiency study; Director Luker and administration staff said the new hauling contract and the efficiency study informed the recommendation to choose the 4% option rather than the cost-of-service increase this year. Councilmember Brown and others emphasized the need to monitor refuse costs and fund balances in the coming year.

The council recorded motions to: set general services fund ad valorem rates at Option 3; set urban services fund refuse, street lights and street cleaning rates at Option 3; set various ancillary rates (motor vehicles, insurance company capital, abandoned urban property, etc.) at prior-year levels where indicated; and to place ordinances on the Aug. 14 docket and set an Aug. 28 public hearing. Each motion passed by voice vote.

The next formal votes on final ordinance adoption will occur at first reading on Aug. 14 and second reading/public hearing on Aug. 28 as required by state statute.