Annexation Compromise Deal Reached; Bill Clears Committee

After nearly one year of discussion, an agreement was reached regarding annexation in Kentucky and passed a House committee with unanimous approval.

KLC Executive Director/CEO J.D. Chaney sat alongside annexation task force chairmen Sen. Robby Mills and Rep. Jonathan Dixon, and KACo Executive Director/CEO Jim Henderson as a compromise version of House Bill 596 was heard on Wednesday in the House Local Government Committee. 

KLC made numerous concessions through these legislative discussions at the insistence of legislative leadership. However, the final legislation promises to protect the ability of cities to continue to be the leaders in economic development and to create hometowns that will provide opportunities to the citizens of Kentucky. 

“Kentucky and its hometowns remain attractive and economically competitive, taxpayer’s interests are served, and a fair process for growth and opportunity remains in place,” Kentucky League of Cities Executive Director|CEO J.D. Chaney said.

The bill’s sponsor praised numerous people and organizations for their work in reaching a compromise.

“I do want to thank KACo and KLC for their collaborative work throughout it, of course, Senator Mills, my co-chair on the committee, and members of the task force [on annexation],” Rep. Jonathan Dixon said. “This was not something that was done by one – this was done by many, and I think it truly shows that when we all work together, we can get the policy done that works for our state.”

The KLC Board of Directors initially voted to oppose the provisions of House Bill 596 that mandated city revenue splitting by cities with the county governments and its instruction to continue to work with the sponsor on amendments; KLC was able to secure amendments with the agreement of the sponsor, legislative leaders, and counties on limiting the application of the revenue splitting provisions in cities located in counties with occupational license tax crediting to a few unique circumstances. 

The revenue splitting provisions will only apply when:

  • The annexation involves a corridor that doesn’t include existing city water or wastewater utility lines; or
  • The annexation is of contiguous territory, and the city does not provide new services to the annexed territory.  

“We’re not all maybe happy, but we all got to a product that we could live with, and I think it’s something we can be proud of,” Rep. Michael Meredith, R-Oakland, a former annexation task force member, said.

KLC Executive Director/CEO J.D. Chaney also testified on House Bill 472, a KLC initiative that allows the appointment of a receiver for a planned community when it fails to maintain the infrastructure, common area, stormwater detention or retention area, or other facility that it is legally obligated to maintain; allow a city to recover funds expended to repair, renovate, maintain, or otherwise bring violations up to code.

The bill also passed the committee unanimously, and both bills now head to the full House for consideration.