Officials discussed the possibility of taxing insurance premiums and approved the first reading of an ordinance continuing the march towards separate city and county tourism commissions during a jam-packed meeting of the McCracken County Fiscal Court Monday.

"We're going to have to find some way to generate some revenue. We can't responsibly continue to use the county's savings to pay current bills," Judge-Executive Craig Clymer said. "One of the potential sources is to put a tax on insurance premiums."

This option arose as a result of discussion surrounding McCracken's budgetary shortfall and the increased need for revenue to fund the payment of its retirement and pension plan, which Commissioner Bill Bartleman called the county's "biggest challenge."

In effect, this tax could be levied on health, vehicle and life insurance policies, as well as fire and allied perils, casualty/liability and inland marine.

Clymer considers the city of Paducah insurance premium tax rate of 6 percent as a starting point for discussions around the issue moving forward. The tax could only be levied on outside of the city limits.

While researching the subject, Deputy Judge-Executive Steve Doolittle found there was no reliable way to calculate McCracken's possible revenue from the tax and used data from eight other Kentucky counties -- three smaller than McCracken: Henderson, Hopkins and Franklin; three bigger: Bullitt, Campbell and Daviess; and two of similar size: Pulaski and Oldham.

"When you go through the data, counties take wildly different approaches in their taxing policies," the deputy judge-executive explained. "Why it's hard to predict what you'd get are things like the variety of land use, how much business activity do you have, there's lots of variables that go into it."

The average rate among those similarly sized counties, he found, was 8.1 percent, with an average yield of $3.5 million. These counties also, on average, counted on those funds for 10 percent of their total budgets.

"Nobody likes to talk about tax increases," Bartleman said.

"If we don't find some revenue ... we're going to have to lay off employees and we don't really have that many extra to lay off. We spent about $3 million this year in the pension fund and in five years that will increase to an estimated $5.8 million."

Clymer thought it was important that this issue be brought to the public's attention to "identify the need and let them know we're working on doing this by fair and equitable means."

Commissioner Eddie Jones said the revenue would be of even greater importance down the road, as agreements with the city to share payroll taxes from the I-24 Industrial Park and Information Age Park are both set to expire by 2022 -- which would see the county lose nearly $500,000 tax dollars.

Later in the evening, the governing body continued to take steps towards splitting up the Paducah Convention & Visitors Bureau in order to form the McCracken County Sports Tourism Commission.

This plan, proposed by Jones in May, is being pursued in the hopes that both the newly formed city and county commissions can levy transient room taxes on hotel and motel rooms within city and county limits to generate revenue for use towards tourism purposes in the area.

The current transient room tax ordinance allows for a 6 percent tax, with 3 percent going to the CVB, 1 percent towards the debt financing and expansion of the Julian Carroll Convention Center, 1 percent towards the Carson Center and 1 percent for use by the Paducah-McCracken County Convention Center Corporation, specifically for operational costs of the center.

The transient room tax would increase from 6 percent to 9, netting a projected additional $1.2 million to put towards recreation efforts.

A major talking point was a change made to the interlocal agreement late during negotiations that would give the county less influence in regards to the distribution of additional transient room tax dollars to the Paducah-McCracken County Convention Center.

With the amount of money going to the convention center slated to double -- from an estimated $300,000 to $600,000 -- with the approval of the tax, the court approved an earlier draft of the ordinance, giving itself the ability to designate a convention center that would receive its funding from the tax and to be able to decide whether or not to levy that specific, additional 1 percent tax at all.

The city of Paducah is expected to respond to this change at tonight's commission meeting, when they are expected to vote on their draft of the interlocal agreement.

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