CAVE CITY, Ky. — Cave City leaders have voted to adopt the compensating property tax rate for the coming year, lowering the city’s real property tax rate from the previous year.

City Attorney Bobby Richardson explained that the compensating rate is calculated using the revenue generated from existing real property in the previous year compared with the current year’s assessment of existing real property.

The rate is designed to generate roughly the same amount of revenue from existing real property as the previous year.

The city’s real property tax rate was 13.4 cents per $100 of assessed value last year. The compensating rate for the coming year is 13 cents per $100.

“The reason we are able to keep our taxes within decent [levels] is because of growth,” Mayor Dwayne Hatcher said.

Hatcher said the assessed value of real and personal property in the city had increased by $2,018,900.

By adopting the compensating rate, the city lowered its real property tax rate by 0.4 cents per $100 of assessed value.

Hatcher said the city could have increased the rate by 0.1 cents per $100 and collected approximately $8,000 more in revenue.

The lower rate does not necessarily mean the city will collect less total property tax revenue because increases in property assessments can expand the taxable property base.

Separately, the council approved an ordinance establishing the city’s property tax rate for automobiles and boats at 17.5 cents per $100 of assessed value.

The vote passed unanimously, with Councilwoman Leticia Cline absent.

Both ordinances will require a second reading and vote before taking effect, which is expected to occur at the council’s next meeting in September.