Kentucky considering amendment to allow local option sales taxes

Not all states allow local governments to levy local option sales tax; right now thirty seven do. Kentucky is currently considering House Bill 1, known as LIFT (Local Investments for Transformation). It would only allow local communities to levy a tax equal to or less than a penny and the sales tax increase would have to have a pre-determined end date. The funds raised would have to be used for voter-approved infrastructure projects. (Kentucky legislators announce local-option sales tax as 2015 House Bill 1) The bill died during last year’s session. It has passed the House, but faces a hurdle in the Senate.

Last week, an association called Kentucky Industrial Utility Customers sent a letter of opposition to Kentucky lawmakers. The companies represented by the association claim that the new law would place too big of a burden on their energy costs – to the tune of $24 million a year. Residential power bills would be exempt from a local option sales tax, but industrial power bills would not. The association sending the letter apparently represented two of the largest employers in Louisville, Ford and General Electric, as well as 28 others. The letter immediately put the passage of the bill into question.

Only a day later, however, General Electric released a statement that they were actually in support of the bill. Instead, a GE spokeswoman said that the companies should have requested an accommodation, rather than put forth a “broad-side attack on the bill.” But there is also opposition to allowing corporations to get an exemption, especially since corporate income taxes have fallen substantially over the last several decades.

Next week is the final full week of the 2015 session. There is opposition in the Senate to the companion bill that would spell out the rules for implementation. However, the amendment to the constitution could pass without the companion bill.