Beech Tree News Network

It was one of the last items on the agenda but arguably the most significant as the Morgantown City Council, last night (Thursday, February 11), unanimously approved the first reading of an ordinance that would set across-the-board tax rates on insurance premiums.  According to city officials, the issue of an insurance premium tax hasn't been addressed since 1985.  Council member Allen Meredith made the motion to approve the proposed ordinance and council member Ronald Givens provided the second.  The motion passed unanimously on a 6-0 vote with council members Gary Southerland, Russell Givens, Sharon Johnson, and Dionne Merritt all supporting the measure, which will actually repeal a previous ordinance on the matter.  

Jerrod Barks, city administrator, provided the council with information that indicated Morgantown lacked a "diversified budget" due to the fact that the city receives approximately 92 percent of its revenue from an occupational tax.  According to Barks, auditors who have examined the city's financial structure have suggested that this approach isn't a good plan for the city. 

The proposed insurance premium tax (2016-01) has an 8 percent tax across all categories, which would actually lower the current 12 percent levy on fire insurance - the only insurance premium that the city currently taxes.  The five categories are casualty, automobile, inland marine, health and life.  Certain restrictions apply to the taxation of health and life insurance policies, according to state law. Individual health plans and high-deductible health plans cannot be taxed, according to city officials.

Council member Allen Meredith cited "infrastructure" concerns in making the motion to approve the new ordinance.  

"We need to do this ... other are," said Meredith.

In explaining the need for additional revenue, Mayor Billy Phelps suggested that the city's looming financial concerns with Kentucky Copper are still significant budget considerations for the city.

According to Barks, the city may take in somewhere between $200,000 and $250,000 annually from the insurance premium tax and it would be collected at the corporate level from the city - not locally.  He also suggested that the city, at some point, may be able to lower its occupational tax as the city's budget becomes more balanced.   

The insurance premium tax ordinance will have a second reading at its March 10 meeting.  If passed on second reading, the ordinance would take effect July 1.

The Morgantown City Council heard reports from the fire chief, interim police chief, an update on the Renaissance Project, update on the maintenance department's response to the recent winter storm, and a proposal for possible smoking restrictions at the Charles Black City Park.  Stay connected to Beech Tree News for a follow-up story on these topics discussed at last night's Morgantown City Council meeting.

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Story by John Embry, Beech Tree News