Legislators could still pass the Kentucky League of Cities’ top legislative initiative before final adjournment on April 14, according to Senate President Robert Stivers (R-Manchester). Stivers held a news conference on Thursday to discuss bills that legislators will consider when they return from the veto break next week.
House Bill 475 would amend the Kentucky Constitution to allow legislators to consider new revenue options for local governments. The KLC Board of Directors identified the measure as the top priority for the 2022 session as it is the first step in modernizing how local governments fund vital services. A companion measure, House Bill 476, keeps the status quo for local governments to ensure they make no changes unless the legislature enacts new revenue options.
Once legislators pass House Bill 475, voters would decide this November on amending Section 181 of the constitution. The 131-year-old provision prohibits legislators from discussing more modern ways for local elected officials to raise the money necessary to pay for things such as street maintenance, parks, and first responders. Kentucky adopted the section in 1891, and it forces cities to rely on only a handful of revenue measures that tax productivity more than consumption.
“If you are interested in a consumption-based tax code,” Stivers said, “it would be critical to get this through versus a production-style tax code. Sales tax versus income tax. There has been a lot of discussion, and that is why there has been a reading.”
Representative Michael Meredith (R-Oakland) sponsored both measures. The House passed House Bill 475 80-17 and House Bill 476 86-11. The Senate gave both bills a reading before legislators broke in March for the 10-day veto period. The Senate Appropriations and Revenue Committee must pass the bills, which could happen when legislators return on April 13. That would allow the Senate to give the measures final passage on April 14.
“It’s time to address this issue that has put us at a competitive disadvantage with neighboring states. I look forward to the possibility of testifying before the Senate Appropriations and Revenue Committee when we return to the Capitol next week,” Meredith said. “Updating the language in Section 181 means the legislature could look for new, modern ways to fund local services that we all depend on — roads, police, fire, sanitation, water, parks, and more. I believe it is time for the voters to decide how they pay in their local communities for the critical services upon which their families depend. Local decision making is vital, and House Bills 475 and 476 are the keys to unlocking Kentucky’s potential.”
Stivers said the bill is still alive. “If you are rating on 100%,” he told reporters, “I’d say it’s probably 50/50.” The bills do not increase taxes nor create any new taxes.
KLC Executive Director/CEO J.D. Chaney urged legislators to move the measures when they return. “This is a priority for cities as they continue to grow and compete with our neighboring states,” he stated. “We are happy to see the legislature begin the discussion of slowly shifting the state to a more consumption-based revenue model, and we hope they will take that same forward-thinking approach with local governments. Cities are the lifeblood of the state; one cannot grow and prosper without the other.”
