Constitutional amendment allowing local option sales tax passes House committee

02/10/2015 12:20 PM

FRANKFORT — A bill which if passed and ratified would give local voters a chance to decide whether they want to pay for new projects, by giving them the right to vote – up or down – on projects and their costs has cleared a House committee.

House Bill 1, sponsored by Speaker of the House Greg Stumbo, D-Prestonsburg, is a local sales tax option that voters would first decided the merit of at the ballot box in November 2016.

The legislation would then allow for local governments to raise sales tax up to one percent, if voters again signal their approval for the project at the ballot. November 2018, would be the earliest a project could be on the ballot.

Kentucky Retail Federation President Tod Griffin expressed concern over some of the unintended consequences of the bill for Kentucky businesses.

“Kentucky’s retail businesses already operate at a competitive disadvantage because of out of state retailers and internet retailers that are not required to collect the 6 percent Kentucky sales tax,” Griffin said. “Adding a one percent local sales tax will essentially increase the edge these out of state firms have over ours bricks and mortar retail stores in your communities.”

Another concern is that many of customers actually paying the tax would not have an opportunity to vote because they didn’t happen to live in city the store is located.

“Advocates for the local option sales tax contend that it’s a tax that the people get to decide if they pay for not,” Griffin said. “While this is true for consumers that live in the jurisdiction levying the tax, it is not true for all Kentuckians paying the tax.”

Louisville mayor Greg Fischer, a strong advocate of the bill over the past two sessions, says that having the local option sales tax for projects could actually help retailers.

“Our point of view is you have to invest,” Fischer said. “We think that we can grow the economy which we think ultimately will be better for the retailers.”

Daviess County Judge-Executive Al Mattingly believes that the bill gives communities hope for a number of projects that they might otherwise not have a chance to have.

“In our community, it could be used for a senior center,” Mattingly said. “In our community it could be used for sewage treatment plant in an area where by all means near the poverty line. They would not be able to get those types of things if they had to rely on local governments.”

The bill did not come up for a vote in the House last year because leadership felt that there were not enough votes for it to pass.

House Speaker Greg Stumbo, D-Prestonsburg, told reporters he believes that it will come up this year, possibly by the end of this week, and will have the votes to pass, thanks in large part to support from House Minority Floor Leader Jeff Hoover, R-Jamestown.

“I’m looking forward to a debate on the floor and I think it’ll pass by a healthy margin,” Stumbo said.


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