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Council debates insurance-premium-tax cut and franchise-fee options but opts to table action
Summary
Councilors heard revenue estimates for small reductions in the insurance premium tax (quarter-point ≈ $142,522) and discussed abolishing the franchise fee; members agreed to budget a modest reduction for next fiscal year and table immediate changes pending budget projections and additional data.
Council reviewed options to reduce the insurance premium tax and discussed the city’s franchise fee.
City staff explained that a quarter-percent reduction in the insurance premium tax — moving from 9.5% to 9.25% — would reduce revenue by about $142,522 based on current figures, and larger reductions were estimated as well (a half-percent reduction would be roughly $285,044). Officials recommended building a modest reduction into next year’s budget process rather than making an immediate change this March.
"I have long called this a hidden tax because most people just don't notice it until it increases or decreases... This affects every single taxpayer in Erlanger," one council member said in support of more aggressive reductions. The speaker also cited KRS 91A.0804 regarding collection fees insurance companies may retain for administering the tax.
Other councilors urged caution: cutting the insurance premium tax by a significant amount would require more planning because the revenue swing is materially larger than small property-tax-rate changes. Members asked staff to include any proposed reductions in the upcoming budget cycle and to prepare estimates showing fiscal impact under scenarios (quarter- and half-percent cuts). One member asked staff to place a franchise-fee reduction item on a future agenda for further review.
Council agreed to table immediate action and to include conservative estimates for a 0.25% reduction in upcoming budget discussions.
