“We always look forward to the fall when it is time to come back and talk about what our 66-member Board of Directors approved as legislative agenda items for Kentucky cities,” Kentucky League of Cities Executive Director/CEO J.D. Chaney said Tuesday morning to open KLC testimony before the Interim Joint Committee on Local Government. “A lot of this will be familiar territory, at least at the top of the agenda, regarding some of the major policy issues such as infrastructure funding and revenue diversification in our local communities.”
Chaney, KLC President and Versailles Mayor Brian Traugott, and First Vice President and Southgate Mayor Jim Hamberg outlined what KLC will advocate for in the 2022 Regular Session. “Cities must have the ability to encourage economic development and in turn enhance the quality of life,” Traugott testified.
Top priorities, he explained, include giving cities adequate, stable, and flexible resources to generate sufficient revenue to provide the vital services that residents expect. “Overall, I think there is general agreement that Kentucky needs to shift to a more consumption-based revenue model, and that’s no different with local governments,” explained Traugott.
“We are only one of twelve states that do not let local governments collect a local sales tax,” he added. “We also need to protect the crediting of occupational taxes paid to a city against those owed to a county in places where the credit currently applies.”
New census data shows that cities are growing and now account for 56% of Kentucky’s population. Traugott noted that city populations increased by 7.1% from 2010 to 2020. The growing popularity of city living creates a growing need for legislators to modernize Kentucky’s antiquated funding options, equalize revenue tools for all cities, and amend an outdated provision in the state constitution that significantly limits the legislature’s power to reform local government tax policies comprehensively.
Chaney thanked Representative Michael Meredith (R-Oakland) for filing a measure to amend Section 181 of the Kentucky Constitution. The 130-year-old provision prevents Kentucky from unlocking its potential. Meredith stressed that the change would not put any new taxes in place and would not give local governments any new taxing power. Instead, the change would only allow the General Assembly to discuss what local government tax reform might look like.
“Our city leaders have done a tremendous job of dealing with funding limitations and financial strains, but there is only so much they can do. Language in the Kentucky Constitution that dates back to 1891 forces cities to rely on a small number of productivity-based revenue options to fund the vital services that citizens and businesses depend on. We are thankful that Representative Meredith is filing legislation that is the first step in updating this archaic provision and moving Kentucky toward a more consumption-based funding model. We look forward to an ongoing discussion about the best way to comprehensively reform local government tax policies,” Chaney said.
“I think this effort is good public policy, and it is a stepped and tiered effort to get to where I think we need to be as a state so we can be more competitive in our region and more competitive nationally,” Meredith stated. He added that the goal is to “have growing revenue streams for our local governments across Kentucky to be able to provide the services that they need to provide to the citizens that they serve, and we all serve as well.”
Once the General Assembly passed a bill to amend the state constitution, Kentuckians would vote on the issue in November. If voters approve, legislators could then pass bills that modernize revenue options for cities and counties.
Modernization is a common theme in the KLC 2022 Agenda, including the need to update the state’s outdated road funding formulas and the motor fuels tax that is the only portion of the state’s Road Fund shared with local governments. Kentucky’s motor fuels tax is currently the lowest of all neighboring states. Since 2009, Kentucky cities have spent 62% more on city streets, but state and federal funding declined more than 4%. Cities maintain more than 10,000 miles of public roadways – streets that are more expensive to build and preserve due to requirements such as curbs and gutters, Americans with Disabilities Act (ADA) mandates, and stormwater drainage.
Traugott detailed the antiquated Formula of Fifths, which legislators approved in 1948. He explained that an agreement reached with the Kentucky Association of Counties (KACo) would split evenly between municipal and county road aid programs at 13% each any funds over the Fiscal Year 2014 high mark of $825 million.
The KLC Agenda also focuses on public safety, including concerns about a backlog at the Department of Criminal Justice Training (DOCJT) training facility. Additionally, municipalities are seeking allowances for home rule cities to adopt 14-day work periods up to 80 hours instead of a 40-hour, seven-day week period. City officials will also ask legislators to strengthen Kentucky’s police decertification law, a KLC initiative that helps keep bad officers from bouncing between departments. The Kentucky Law Enforcement Council (KLEC) needs to be able to terminate a decertified officer without a bill of rights hearing. Cities would also like to see the legislature remove limits on the number of rehired police officers or firefighters a city may employ.
Hamberg reiterated a KLC priority the League first testified about in August, a shortage of paramedics and the need for an expedited process for cities to obtain a certificate of need to provide ambulance service if a private company cannot respond to emergencies quickly.
He also focused testimony on another topic impacting families and the cities in which they live, substance abuse. “The current COVID pandemic resulted in an increased wave of overdose deaths, up nearly 50% in 2020,” Hamberg explained. “KLC supports legislation that addresses the criminal aspects of the substance abuse issue and those that take a proactive stance on treatment, rehabilitation, training, and workforce reentry.”
The General Assembly will convene the 2022 regular legislative session on January 4.