FRANKFORT, Ky. — Governor Andy Beshear signed an executive order Wednesday halting increases in vehicle property taxes after the value of motor vehicles went up more than 40% in the Commonwealth this year.
Kenton County Clerk Gabrielle Summe said in January one of the issues driving up property taxes for vehicle owners is supply and demand. New vehicle production has decreased due in part to a shortage of necessary computer chips, resulting in months of price hikes.
That impact could be seen on Kentuckians' vehicle registration costs. The cost of renewing registration on cars spiked in 2022.
"The property valuation for the average motor vehicle in Kentucky rose from $8,006 to $11,162 in just one year," reads a press release from Beshear's office.
The order will amount to about $340 million in reduced vehicle property taxes, he said.
Under the executive order signed on Wednesday, Kentuckians will instead pay a tax amount similar to 2021 for the same vehicle in the same condition, if the driver lives in the same county.
Those who already paid 2022 vehicle property taxes will receive a refund from their local county clerk's office, the press release said.
The Kentucky House passed a bill recently to give tax relief to vehicle owners. That measure is awaiting action in the Senate. Republicans have supermajorities in both chambers.
During a press conference, Beshear also announced he's working with Kentucky House Democratic Caucus Whip Angie Hatton on legislation that would cut the state's sales tax from 6% to 5% from July 1, 2022 through June 30, 2023.
Republican lawmakers have signaled their intention to introduce a comprehensive plan to revamp the state’s tax code.
The proposal could have a direct impact on people living in the Tri-State, possibly encouraging people to shop in Kentucky over Ohio. Mark Ramler, Newport Business Association president, said one percent can go a long way.
"I think it's going to make us, Newport in particular, a lot more competitive with Cincinnati," Ramler said. "If you're going out to dinner or going to get a new car, that's going to add up."
Beshear's executive order and support of the sales tax cut is in an effort to help Kentuckians until the high U.S. annual inflation rate lowers — which isn't expected to happen until some time in 2023, Beshear said.
America’s current inflation woes stem from the COVID-19 pandemic. Supply chains for computer chips, clothes, furniture and other goods are under stress. At the same time, consumer demand has surged after a historical amount of government aid flowed into the economy.
The tax cut and elimination of the vehicle property tax hike are possible because Kentucky has seen strong economic development in the last year, according to Beshear.
"A booming economy and the best state budget in 25 years means we can do more to help our working families and small businesses buy and sell the essential goods and services that are costing more and that are simply priced too high," said Beshear.
Inflation is the latest challenge for Cincinnati home builders
Inflation: What is the effect on the Tri-State and what prices are up?