Kentucky’s top two legislative leaders are throwing cold water on a proposal to create a local option sales tax for city and county governments.
The plan would give local voters the ability to decide whether to fund special projects through a temporary increase to the state sales tax. It would typically be used for infrastructure, supporters say, but could also be applied to long-term investments.
Democratic House Speaker Greg Stumbo, however, says cities already have alternatives for such projects.
“There’s a lot of options that they have, that they haven’t used for local option taxes if they want to utilize them. So I don’t necessarily favor it,” he says.
The measure is heavily supported by Louisville Mayor Greg Fischer and Lexington Mayor Jim Gray, both Democrats.
Fischer recently urged residents in favor of the idea to call state lawmakers during his State of the City address, saying it was important for cities to have the freedom to generate new revenue “rather than going to Frankfort and begging for money.”
The mayor’s office has been lobbying lawmakers in Frankfort, along with representatives from Greater Louisville Inc. during this short legislative session.
State Sen. Kathy Stein, a Democrat from Lexington, has filed a bill to amend the state Constitution to allow a local option, but it has little chance of passing the GOP-controlled chamber.
Republican Senate President Robert Stivers says his caucus is not focused on putting more burdens on individuals as part of any tax reform.
“If you can grow revenues by creating jobs, I’d say that you’d walk in and talk to all 24 members of our caucus and they’ll say that type of tax reform, that does not subject the individual to anymore liability, but brings more people into the base,” he says.
Those comments echo critics who point to a study out of Washington, D.C., which ranks Louisville as the fifth most tax burdened city in the country. Louisville Councilman Ken Fleming, R-7, has also questioned the lack of specifics being offered by local option supporters, such as the length of the levy or percentage of new revenue kept by the state.
Asked about Stivers and Stumbo’s reaction to the plan, Fischer told WFPL it is important state lawmakers give Louisville a way to even the economic playing field with competitive cities.
“Local option is not a tax,” Fischer says. “It’s a choice where people can say how they want to smartly invest in their community. And just like a business, a city needs to make smart investments that attract more companies and make it an easier place to grow jobs. Also, you have to be cognizant of the fact that 37 states that we compete with use this economic development tool as well.”
Despite opposition from legislative leaders in Frankfort, the push for a local option sales tax will continue into next year’s session. The mayor says persuading state lawmakers won’t happen overnight, but that passing the plan in 2013 wasn’t his goal.
“We see this as a journey of education that’s going to take some time,” Fischer says. “We’ve just started so the reaction we’re getting from citizens has been very, very positive and I’m sure that’s going to translate to legislative optimism as well, but it’s going to take some time.”
The mayor hasn’t scheduled any meetings with Stivers or Stumbo, but Fischer says he talks to Stivers an Stumbo frequently, and local option will come up.