The Erlanger City Council discussed how to make tax adjustments Tuesday after a $49 million error was discovered in the personal property tax assessment.
In a call with the Property Value Administration last week, the city discovered that its 2023 property valuation was inaccurate because an unnamed company had incorrectly classified $49 million worth of inventory as being in a warehouse rather than in transit.
How does the property tax work?
Property taxes are broken down into several categories. The first and usually largest part of your tax bill is the property tax, sometimes called real estate tax. This is essentially a tax on everything you own that is nailed down. For individuals, this is homes and other real estate. For businesses, this is office buildings and other buildings and facilities used for business purposes.
Tangible personal property, on the other hand, is another form of property that is not real estate ownership. Depending on where you live, residents may not have to pay taxes on personal property at all—this varies by jurisdiction.
Depending on where you live, additional tax-related fees may apply.
Read more here.
According to Mayor Jessica Fette, the Property Value Administration (PVA) learned of this in May of this year, but the city was not informed until she called to inquire about the drastic difference in the valuation of her personal property.
“Components in transit are not subject to the city tax rate, so unfortunately that was communicated in a phone conversation between myself and the PVA,” Fette said. “That $49 million was removed from our 2023 tax rolls and will not appear in future tax rolls. So that means the tax rate we set last year was artificially lower than it should have been.”
Last year, the city set a tax rate of .198, down from the previous year’s rate of .296. Fette said the city is taking the loss, not resetting the tax rate and receiving additional revenue from businesses. The city also faces a problem because the 2024 Personal Asset Assessment certified lists are missing businesses, some of which are major contributors.
When Council Member Jennifer Jasper-Lucas asked Fette about the cost of the error, he said the $49 million error would cost the city $97,000. The company affected by the error would get the $97,000 it was owed back from the city. When asked about the problem and the reason for the error, the PVA apologized and promised to do better, Fette said.
“If we hadn’t added that $49 million to our estimate last year, the compensation rate would actually have been 0.243,” Fette said. “So it would have been a decrease from the previous year’s rate, not quite as significant, but accurate.”
Council member Rebecca Reckers asked if the council had any questions about the drastic increase last year. Fette said they assumed it was due to the increase in property values in Erlanger, although the error occurred in the valuation of inventory and finished goods. Fette said things will change in the future and the council will have to quickly set a new tax rate.
Jasper-Lucas said she found it difficult to work toward a solution because she felt she could not trust the data provided.
“We need to do better in 2024. I’m not saying that to anyone here, but to the people who give us this data,” she said. “There needs to be a more automated system whose data we can trust. I’m very disappointed.”
Reckers was not in favor of raising taxes to make up for last year’s large drop caused by the county’s error, while Councilmember Tyson Hermes suggested raising taxes but keeping them lower than the 2022-2023 rate. Councilmember Vicki Kyle also suggested meeting in the middle of the two proposed rates.
At the end of the discussion, the Council concluded that it was not concerned with achieving budget revenues. The tax rates currently proposed are a basic tax rate of 0.247 and a material tax rate of 0.198.
The council has scheduled a special meeting for August 27 to conduct a first reading of the new tax rate, with a second reading to take place at the council meeting on September 3.
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