Local option sales tax proposal clears House committee

KY_State_Capitol

FRANKFORT (Kentucky Legislature News)—A House committee has approved a proposed local option sales tax constitutional amendment that, if approved by the state’s voters, could help cities and counties fund local building and infrastructure projects.

House Bill 1, sponsored by House Speaker Greg Stumbo, D-Prestonsburg, and House Minority Leader Jeff Hoover, R-Jamestown, was approved this morning by the House Elections, Constitutional Amendments and Intergovernmental Affairs Committee. It now goes to the full House for consideration.  If passed, the bill would place a constitutional amendment on a statewide ballot allowing state lawmakers to give local governments the power to levy up to a penny of local option sales and use tax for specific projects with local voter approval. The tax would be eliminated when the project is paid off.  “It’s fairly simple,” said Stumbo. “It allows local people to choose whether they want to be taxed. It allows them to make the decision and dedicate the funding sources to a particular project. When the bonds are satisfied then that particular tax goes away.”

Thirty seven states currently allow local governments to use a local option sales tax for local projects, according to HB 1 cosponsor Rep. Tommy Thompson, D-Owensboro.  Rep. Mark Harmon, R-Danville, who has filed a couple of floor amendments to HB 1, questioned language in the legislation that would allow any “residual payments” collected by local governments from the local option sales tax after the levy expires to be used for maintenance of the project.  “To me, that sounds like a clause that says this tax never ends,” said Harmon.

Louisville Mayor Greg Fischer’s representative Sara Massey said the tax would be temporary and that language in the legislation that Harmon questioned deals with late collections coming into local governments after the levy has expired.  The funds would not be allowed to go into the state General Fund, according to the proposal.  Fischer – a supporter of the tax option, known in Kentucky as LIFT (Local Investments in Transformation)—said revenue tools available to local governments in the state today are fairly limited.  “As we looked around the country, we saw these (options) were very popular,” he said.