When the McCracken County Fiscal Court passed an insurance premium tax a year ago, they didn’t know a pandemic was waiting in the wings.

Originally thought of as a way to help the county financially recuperate after nearly a decade of deficit spending, the tax will wind up being a valuable lifeline during a worldwide crisis that’s still without end.

“If we hadn’t (levied this tax) I cannot imagine where we’d be,” Deputy Judge-Executive Steve Doolittle told The Sun last week. “This provided the best long-term solution for the county with everything that was going on.”

Judge-Executive Craig Clymer, too, feels the tax was a thing the court needed to do.

“We looked at every other possibility to develop a new revenue source and that was about what we had to land on,” Clymer said. “It was necessary, I’d say, to get our reserves up and have something to work off of. It’s a substantial amount of money to try to get us back up to where we need to be.”

Passed by the fiscal court a year ago today (Feb. 10, 2020), the tax did not go into effect until July 1, 2020 and the county didn’t see its first revenue until after the first financial quarter of the fiscal year ended in October. That one quarter, Doolittle said, yielded $815,604.

Projections for how much the tax would yield in total for the 2021 Fiscal Year couldn’t be accurately made, Doolittle and Clymer said. That’s because the tax base is not one easily accounted for and because people pay for insurance at different times.

“We didn’t know how to project it because there was nobody that kept data as to how big the tax base was,” Doolittle said. “We were doing complete guesswork so we didn’t actually know how much we would get. We’re getting a better idea now. Who knows that could have been our high quarter or it could have been our low quarter. It’ll just take the passage of time.”

The total listed in the budget was estimated to be $1.3 million, which the county has already eclipsed during its second quarter of collections, which is still currently in progress and has amounted to around $744,000, Clymer said.

“It’s virtually impossible to predict what it’s going to bring in because people buy and sell inventory and the insurance they have on their inventory. It’ll go up, it’ll go down,” Clymer said. “We try to be real conservative because if we budgeted it we would spend it.

“We didn’t want to spend money that we didn’t have.”

These funds will be put directly toward the county’s general fund and, Doolittle said, “end up all over the budget” to help the county fulfill needs in several departments like the jail and road. Additional funds, Clymer said, could be rolled into the reserves or into county initiatives and projects, like revamping the 911 systems or the development of the McCracken County Athletic Complex and Carson Park.

An accurate projection for an annual yield won’t be possible until after the county has been collecting for a year or two, in Doolittle’s eyes. This first year will only collect three quarters of taxes due to the mechanics of when the tax went into effect.

“In talking to other professionals in the field that have experience with this tax you can be up one quarter and down the next,” Doolittle said. “It can be a little hard to predict. Ask me in three years what it’s doing and I think I’d be better able to say at that point.”

These tax rates — 6.9% on automobile insurance; 6.9 on life insurance (only the first year would be taxed); 4.9% on fire and allied perils (which includes home insurance); 4.9% on inland marine insurance; 4.9 on casualty insurance; 4.9 on all other risk insurance; and 0 on health insurance for residents of McCracken County outside Paducah city limits — are expected to remain in place moving forward, Clymer said. It is unlikely there will be a change to the rates in the next couple years.

“(Before we adjust up or down) we definitely need at least a full year or a longer period of time to see what was generated and get a little better feel to be able to anticipate or predict how much this brings in,” he said. “I think we’ll just have to look in the rear view mirror and see what it did.”

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