The House passed the top KLC legislative priority on Wednesday by a vote of 80-17. House Bill 475 will allow the General Assembly to reform local government tax policies comprehensively.
Kentucky’s constitution limits the mechanisms that legislators can grant to local governments for funding operations, programs, and other essential services. However, if voters approve the constitutional amendment in November, legislators could begin discussing ways to give local governments more flexibility when crafting local revenue systems.
“We all know that revenue is restricted by Section 181 of the 1891 constitution,” Meredith said on the House floor. “Those restrictions say that local governments can only tax property, license fees, and franchise fees. That’s a tax on productivity and a tax on property in those jurisdictions, and those are the only things that can be taxed.”
He said that Kentucky is among the nation’s top five states for reliance on those local taxes, which puts the commonwealth at a disadvantage when recruiting new businesses and residents. “I think many of us in this body are focused on competitiveness. Others focus on revenue generation. Passing House Bill 475 will give us the opportunity to work on both of those issues in future General Assemblies and allow us to compete in a modern global economy,” Meredith stated.
Representative Ken Fleming (R-Louisville) spoke in support of the bill. “When looking at what we’re trying to accomplish, this is needed to get the ball rolling,” he said. “If we are looking at tax modernization, this has to be part. This is an important element when looking at things in totality of tax modernization. I encourage you all to support this.”
While House Bill 475 would allow the General Assembly to consider options for local governments, it does not raise taxes. The measure must pass the Senate by a three-fifths majority before getting on the November ballot. If Kentuckians approve, the General Assembly could pass a framework in the 2023 session.
The House also passed House Bill 476, a companion bill to HB 475. Meredith said that measure ensures guardrails are in place if voters pass the constitutional amendment. The bill ensures local governments can continue to utilize tax laws already in statutes, but it does not allow them to create new options.
Representatives also approved House Bill 414. Representative John Blanton (R-Salyersville) sponsored the measure that amends several statutes relating to public safety personnel to ensure cities can recruit and retain the best possible candidates.
“As a proud former law enforcement officer, I bring you this bill because I know it will benefit our public safety personnel, our local governments, and the citizens many have sworn to protect and serve,” Blanton said.
The measure adjusts the number of retired police officers a department may employ without paying pension contributions, removes the maximum age limitation to hire police and fire personnel, and clarifies the disciplinary process for some complaints against firefighters and police officers.
It also creates flexibility for police departments by using an 80-hour, 14-day work period instead of a 40-hour, seven-day period. Cities have requested the option to create a better work-life balance for officers and save on overtime.
All three measures now head to the Senate for consideration.
The Senate unanimously passed Senate Bill 152, a measure that will save cities time and money when they need to transfer a waste management franchise to a private company. The current statute creates a lengthy and challenging process for a municipality to award the franchise to a private company.
Senator Stephen West (R-Paris) sponsored the bill. “Nothing changes the current process as it pertains to the bid process,” West said from the Senate floor. “These private carriers, whoever they are, would still have to go through the bid process. A citizen, if they had a problem with the process, could still attend the city council meeting and voice their concerns.”
Senate Bill 152 heads to the House of Representatives for consideration.