Tagged: local option sales tax

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. 

Louisville Democrat David James and Republican Ken Fleming don’t always agree as leaders of their respective caucuses, but the two Metro Council members hope city lawmakers tackle a number of issues this year.

Among them is the new spending plan for the city. Mayor Greg Fischer says the local economy is bouncing back from the recession, but Metro Government still faces a $13 million budget shortfall.

Both parties hope the budget process is transparent, and James and Fleming agree that public dollars for city services are running thin and need to be spent wisely.

Mayor Greg Fischer says Louisville’s economy is rebounding from the national recession, but the city still faces a large budget shortfall due to rising pension costs.

Fischer made the comments at his annual State of the City address before the Rotary Club at the Kentucky Center for African-American Heritage. This year's speech was slightly more upbeat than previous ones, with the mayor arguing that Louisville is becoming more entrepreneurial.

The Metro area has added 22,000 jobs and unemployment has dropped by almost four percent in the last two years. But challenges remain, namely Metro Government's hefty budget deficits.

"Last year’s $25 million gap is now down to about $13-14 million out of a $500 million general fund. That’s still a lot of money. But we didn’t get into this problem in two years and we can’t solve it in two years," says Fischer.

Proponents of a local option sales tax have gained big ally in their legislative fight: Gov. Steve Beshear. 

The local option sales tax would allow cities to levy an additional tax on top of the state’s current six percent sales tax for specific projects, if local voters approved the new tax.