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Proposed amendment that would give local government more tax options passes first hurdle

By Tom Latek
Kentucky Today

A proposed constitutional amendment that would set the stage for local governments to change to a more consumption-based taxing system passed its first legislative test on Thursday.

Rep. Michael Meredith, R-Oakland, is sponsor of the legislation that has more than 50 bipartisan co-sponsors. He told the House Elections, Constitutional Amendments and Intergovernmental Affairs Committee this is the first step in a three-step process.

“The first step would be for us to remove restrictions so the General Assembly could come back and take input from all the stakeholders involved to create a comprehensive local tax reform framework,” he said. “That would then hopefully be passed by the General Assembly after this amendment was ratified by the voters. Local governments would then have to pass their own ordinances within that framework.”

Rep. Michael Meredith is sponsor of the measure that will benefit local governments. (Photo by Tom Latek, Kentucky Today)

He noted that the only current way for local governments to get new revenue, is by raising productivity, occupational and property taxes.

Several groups also appeared in support of the measure, including Iris Wilbur of Greater Louisville, Inc., or GLI.

“This presents the General Assembly with an invaluable opportunity to rethink and recreate city and county government taxation in the Commonwealth,” she said. This is sorely needed to build more competitive local tax structures to support economic growth, promote business development, and attract and retain top talent.”

J.D. Chaney with the Kentucky League of Cities told the panel the current one size fits all approach doesn’t work for community needs.

“Corbin and Covington are two very different places; so are Wickliffe and Elkhorn City,” he said. “Their economies are different, their tax base is different, and they’re going to rely on different revenue options.”

But Kevin Cranley, chairman of the Kentucky Retail Federation spoke in opposition to the proposal, saying he feared this would allow local governments to enact new local taxes on good and services.

“Kentucky taxpayers, who are also customers and your constituents, currently enjoy a constitutional protection that the General Assembly is authorized for taxes such as this,” he said. “It’s important that they maintain that protection.”

He added, “My fear is that this bill, because it’s going through pretty quickly, there are just a tremendous amount of unintended consequences.”

Although several committee members indicating they were voting in favor of the bill reluctantly, it passed the Committee without dissent, with two members passing on their vote.

The measure now heads to the full House.

The legislation is House Bill 475.

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