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MCCRACKEN COUNTY, KY -- McCracken County leaders say they're still in a financial struggle, so they're proposing a new tax that could bring in millions.

They need the money for three reasons.

  1. The county is paying out state pensions.
  2. Property assessments for the county were not done in many years, so means the county lost revenue from property taxes.
  3. The county has about a $1 million budget shortfall.

County leaders passed the first reading of hotel transient tax proposal Monday that would mean a 10% total tax — with 6% going to the county and 4% going to the city of Paducah.

The proposal is "basically trying to utilize a revenue source that is nonexistent today that's paid for by others, people traveling to and through our community," Paducah City Manager Jim Arndt said. 

County leaders have said they need more revenue. At Monday night's fiscal court meeting, Judge Executive Craig Clymer said the county is in a tight spot financially. "We've got to find some way to generate some revenue. We can't continue — responsibly continue — to take money from our savings," Clymer said. 

From 2011 to now, the county has spent millions from savings to pay routine bills. 

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Deputy Judge Executive Steve Doolittle found that insurance premium taxes could be the solution. Those are taxes on insurance including for cars, homes, and health. He looked at eight other counties in Kentucky. On average, he said, they have an 8.1% tax that generates about $3.5 million of revenue.

What would that mean for you? If you pay $130 a month on car insurance, the tax would add about $8 to that bill.

"There's just a lot of things that county governments can't do, so this is the one tax that doesn't have the minimum, doesn't have a maximum," Doolittle explained.

The county's financial problems could fall into your lap. The fiscal court has until March 2020 to decide if it wants to move forward with that tax. It would take effect July 1, during the next fiscal year.

The county wouldn't see revenue until October 2020, because those taxes are collected quarterly.

As for the hotel transient tax, Arndt said, once passed, it will be implemented in September or October.

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