State Department of Revenue officials spoke with the McCracken County Fiscal Court Monday, updating commissioners on the steps being taken to right the ship in the county's Property Valuation Administrator office.
"What has happened here is definitely out of the absolute ordinary that I've ever seen," said Joe Lancaster, executive director of the Kentucky Department of Revenue's Office of Property Evaluation. "This is definitely a serious moment. Hopefully, we can commit as many resources as possible. We can assist the PVA, but we can't make promises to come in and do wondrous things to help."
Since taking the McCracken County PVA post in October 2018, Bill Dunn and his administration have found 34 properties that were omitted from the county's tax roll with an estimated value of over $7.5 million. Dunn also believes that the county is under assessed by somewhere between $1 and $3 billion. Much of the blame for the poor performance of the office is attributed to Nancy Bock, who was PVA for nearly three decades before resigning in September 2018. Bock was indicted on charges of theft by unlawful taking and forgery.
"Many millions of dollars worth of property were undervalued or completely omitted from the tax rolls," Judge-Executive Craig Clymer said. "I think we have a handle on the under assessed. As time rolls on, those properties will be reassessed, but the real problem that we're dealing with is the omitted properties."
This is an issue that affects the amount of money collected by every district that levies property taxes, including schools, the city of Paducah, fire departments, the library and many others in addition to the county.
Dunn explained the search for omitted properties is slow going, having only inspected 11 percent of the county over the last year -- a number that should be closer to 25 percent, in his estimation.
"We want to take every effort that we can to correct this issue," said Tom Crawford, director of local valuation for the state. "We are going to get a handle on it very soon and see exactly what the problem is to get those assessments up to where they need to be."
Some preliminary work, Crawford said, has already been done. The state is committing two or three field staff members to the problem and Dunn has granted some field staffers from Lancaster's office remote access to the tax roll, allowing them to chip away at the issue without traveling to Paducah.
Dunn will be formalizing a work plan with Martha Tapley, the branch manager for the KDR's Western District of field representatives.
Of Dunn's efforts thus far, Clymer said, "He's top notch and in a real strong position. He's being aggressive and trying to get the office where it needs to be."
Omitted properties can be billed for up to five years of back taxes plus a 10 percent penalty, if self-reported by the owners, or a 20 percent penalty, if discovered by the PVA office, and additional interest.
Three different officials within McCracken County -- the sheriff, county clerk and county attorney -- each have the ability waive the penalties on omitted properties, although the interest would remain. Crawford suggests the creation of a committee, in conjunction with the KDR legal department, to determine the best methodology for making decisions on a case-by-case basis.
"Black and white, we have to go back five years -- or however many years it hasn't been on the tax roll, but up to five years -- and we have to charge interest," Commissioner Jeff Parker said. "That's state law. That's the way it is [with omitted properties]."
While Commissioner Eddie Jones described the current situation as "government performance, at the very least, on a disappointing level," he hopes that taxpayers will not be punished because the previous PVA office didn't operate the way it should.
"It seems to me that this is a situation where no taxpayer should get a penalty, unless the government's performed properly," he said.
Clymer agreed with Jones but acknowledged there does need to be some consideration given to penalties on a case-by-case basis.
Along the same lines, Commissioner Bill Bartleman expressed interest in creating a structure to ease the billing process on taxpayers.
"It's really the lack of a government office doing their job that caused all this and we want to give some leeway to the taxpayers," said the second-term commissioner.
Thinking of the county's declining financial state over the past decade, Jones asked Dunn what the $7.5 million in omitted properties would yield in tax dollars. His answer: roughly $700.
"I just think it's important to keep in perspective that this is not a big moneymaker," Jones said. "It's not the solution to [all of the county's] money problems."