Choice or taxes? House panel clears local option sales tax – The Richmond Register

By Ronnie Ellis / CNHI News Services
Source: The Richmond Register

 

FRANKFORT — Supporters say the issue is not about taxes but about choice.

The issue is a measure — which if voters approve a constitutional amendment — would allow local voters to approve a temporary additional sales tax of up to 1 percent to pay for specified local projects.

“This is not about a tax,” Rep. Tommy Thompson, D-Owensboro, told the House Elections, Constitutional Amendments and Intergovernmental Affairs Committee. “It’s about giving people a choice.”

House Bill 1, sponsored by Speaker Greg Stumbo, D-Prestonsburg, would place a constitutional amendment on a statewide ballot allowing local governments to levy up to a penny of local option sales tax for specific projects with local voter approval. The tax would be eliminated when the project is paid off.

Stumbo likes to quote Senate President Robert Stivers, R-Manchester, who calls the idea “democracy in its purest form.”

The measure is supported by more than 40 organizations, including the Kentucky League of Cities, the Kentucky Association of Counties, chambers of commerce, and the mayors of Louisville and Lexington.

Louisville Mayor Greg Fischer told the committee the measure would fund projects “that people can see and can vote on so they’ll feel like their money is put to good use.” Fischer said 37 other states allow such a local option sales tax.

He said public polls indicate 60 percent of respondents favor the measure, although Rep. Mike Harmon, R-Danville, said the poll actually suggested people could vote to lower taxes as well as raise them.

Rep. Jim Wayne, D-Louisville, claims the tax is too regressive, that its effects will fall disproportionately on the lower income groups while Todd Griffin, president of the Kentucky Retail Association, said it will hurt small businesses, especially those along borders of states with lower sales taxes.

Wayne concedes the need for more revenue to fund infrastructure projects at the local level, but he suggested a fairer way to do that would be to allow local governments to assess fees and taxes on property transfers or income rather than through the sales tax. Those alternatives would shift more of the burden up the income scale.

Griffin said the tax is also unfair because many rural residents shop and spend money in more urban locations where the tax is most likely to be assessed – but wouldn’t have the opportunity to vote on whether to impose the tax. He said it will also increase the burden on businesses which must collect the tax and remit a portion to a local municipality while sending the rest to Frankfort.

But Stumbo said the idea is a simple one.

“It allows local people to choose whether they want to be taxed,” Stumbo said. “It allows them to make the decision and dedicate the funding sources to a particular project. When the bonds are satisfied then that particular tax goes away.”

Despite Wayne’s contention that the less affluent pay a much higher percentage of their disposable income in sales taxes, Stumbo said the exemptions for food, medicine and residential utilities lessens the regressive nature of the tax. And, he said, it’s a fair tax “because everybody pays it.”

Harmon suggested some of the bill’s language might be unclear about the specified “sunset” of such taxes and plans to file floor amendments to the bill.

The measure is co-sponsored by House Minority Leader Jeff Hoover, R-Jamestown. Stumbo said that’s an indication of support by at least some Republican House members, adding he probably needs eight to 10 Republican votes to pass the measure.

The bill now goes to the full House for a vote.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

 

What People Are Saying

  • “Putting the local-tax amendment on the November 2014 statewide ballot is a no-brainer. If local people want to levy local taxes on themselves, they should be able to.”

    Al Cross, Courier-Journal columnist
  • Jeff-Bringardner-headshot-only“This is a way to keep dollars in the area, to come up with a diverse slate of projects that sync up with the long-term plans of the community and get voted on by the people”

    Jeff Bringardner, President, Humana Kentucky
  • BillLamb“If Louisville could adopt a 1% Local Option Tax, it would impose a minimal burden, but would raise over 90 million dollars a year.”

    Bill Lamb, President and General Manager for WDRB and WNYO
  • Bill Samuels Bellarmine Portrait“Local option makes all the sense in the world. Offering citizens the opportunity to vote on investing in their community is how our country ought to operate.”

    Bill Samuels, Chairman, Emeritus Makers Mark
  • …a new way for communities to see the projects they want and need go from the drawing board to reality — and to do it for themselves.

    Jim Host, founder of Host Communications and former State Commerce Secretary
  • LIFT is a tried-and-true tool that allows for more voter involvement in the process.  Voters, not politicians, would help determine big picture, visionary projects that could improve quality of life.

    Dave Adkisson, President and CEO of the Kentucky Chamber of Commerce
  • …an idea whose time has come, and could be a crucial economic development tool which will help our local communities build a better future, and the new jobs and businesses we need.

    Hal Goode, President and CEO of the Kentucky Association of Economic Development
  • In our opinion, Kentucky voters should be allowed to vote on the local option sales tax because it could fund public facilities without increasing property taxes.

    Morehead News
  • It will allow communities to plan and pay for improvements to enhance civic and economic life without going hat in hand each budget session to Frankfort.

    Lexington Herald-Leader
  • The beauty of it is that local voters have the say-so as to its enactment, and they have a sense that they are getting what they pay for.

    Princeton Times-Leader