Local option sales tax legislation passes House committee

03/07/2016 07:00 PM

FRANKFORT- Legislation which would give local communities the option to place an additional sales tax to pay for voter approved local investments has cleared a legislative hurdle on Monday.

House Bill 2, sponsored by Speaker of the House Greg Stumbo, D-Prestonsburg, was passed by the House Standing Committee on Elections, Constitutional Amendments, and Intergovernmental Affairs on Monday by a 6-1 vote with Rep. Joe Fischer, R-Ft. Thomas, casting the lone no vote.

If passed by the House and Senate, House Bill 2 would let statewide voters decide this fall on a proposed constitutional amendment that would allow state lawmakers to give local governments the power to enact an up-to-1 percent tax for a specific local projects for a limited time, if the tax is approved in a local referendum.

The tax would be discontinued once a project is paid off or a certain number of years has passed, whichever comes first, according to the legislation.

Stumbo told committee members that the legislation is one of the purest forms of democracy.

“When people get the right to choose if they want to see a tax enacted on themselves,” Stumbo said. “Not only do they get the right to choose once, it’s actually a 3-tier process.”

Stumbo says one of the best selling points of his legislation is that citizens will be able to see exactly what the tax increase money is being used for.

“I believe that’s the way in modern times that we have to approach these funding situations,” Stumbo said. “The government has to make sure that the people understand that their moneys not being wasted. It’s going for a dedicated purpose, or a purpose that has broad public support.”

Louisville Mayor Greg Fischer has been a strong advocate for the local option sales tax and says that during the current times of limited state funds, it can be a very useful option to get much needed local projects completed.

“If we as a state want to stay competitive, we have to have more funds than we’ve got,” Fischer said. “These funds are only invested if people vote for this specific project, so it’s democracy at its finest.”

Local option sales taxes are now allowed to be levied by at least one local government in 38 states including every state bordering Kentucky except Indiana, according to the Kentucky League of Cities. City and counties in Kentucky have never had local option sales tax authority under the current state constitution.

HB 2 now moves on to the full House chamber for consideration.


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