Kentucky legislators will again consider legislation that would allow local governments to temporarily levy a 1 percent sales tax to fund projects.
Despite support from across the political spectrum, it’s unclear whether the local option sales tax will become Kentucky law this year.
The local option sales tax bill brought together the House’s Democratic and Republican leaders, who are otherwise locked in a fierce political battle for control of the legislative body. It was proposed Tuesday by Democratic House Speaker Greg Sumbo and Republican House Minority Leader Jeff Hoover.
Supporters say the legislation would allow local governments to decide upon and fund important projects in their communities, such as the planned Louisville Waterfront Park expansion.
“Giving citizens the right to vote is a bedrock American principle, and today’s filing of the bill allowing local option in Kentucky represents democracy at its best,” said Louisville Mayor Greg Fischer, a vocal support, in a news release.
The bill is a constitutional amendment, meaning it would require the support of at least 60 members of the 100-person House and 23 members of the 38-person Senate. The amendment would then be put to a statewide referendum on the ballot during the November general election.
If the referendum passes, local voters would decide whether to enact individual sales tax hikes in local referenda.
In addition to bipartisan support, the local option sales tax also has opponents on both sides of the political divide.
State Rep. Jim Wayne, a Democrat from Louisville, said the tax would disproportionately hurt poor people.
“Whenever you add a sales tax, it hurts low-income and moderate-income folks much worse than it does the wealthy,” Wayne said. “Why? Low-income folks have to spend every dollar they earn. The wealthy folks don’t spend every dollar they earn, they invest about half of it.”
Because the bill is a constitutional amendment, Republican Gov. Matt Bevin’s signature isn’t required for it to become law. But Bevin opposed the local option sales tax on the campaign trail last year, and his stance could affect an outcome in the Republican-led Senate.
The bill narrowly passed the state House last year but failed to get a hearing in the Senate after members of the energy industry requested carve-outs from the additional tax, throwing the bill into a tailspin.
Industrial power consumers — unlike residential ones — aren’t exempt from paying sales taxes on their power bills. Last year, a group called the Kentucky Industrial Utility Customers predicted that large energy consumers would have to pay up to $24 million more per year as a result of a local option sales tax.
Senate President Robert Stivers, a Republican from Manchester, said he supports the issue but isn’t sure about the rest of his chamber.
“I’ve always said I think it’s the purest form of government,” Stivers said.
State Republican Party Chair Mac Brown, who also chaired Bevin’s transition team, said in a news release from a pro-local option sales tax group that the proposal is a “very important initiative to allow for greater control to be returned to local communities and citizens.”
The bill has not yet been assigned to a committee.