By JAT Mountjoy
A big policy issue that the 2015 General Assembly will be looking at during the upcoming session is a proposal to amend the state constitution to allow communities to enact a temporary local sales tax if approved by its citizens. In fact, House Speaker Greg Stumbo has given this issue the distinction of being designated as House Bill 1.
For the past year, volunteers and representatives from LIFT (Local Investments for Transformation) Kentucky, a coalition of prominent business, civic and government leaders helping to support this plan, have traveled across the state and heard about projects that local communities would hope to fund through this local option.
Local governments, including Owensboro and Daviess County, often face budget issues when striving to cover basic needs such as paving roads, disposing of waste and policing the streets. When you couple these issues with the rising costs of pensions, local governments are squeezed even tighter and rarely have anything left over to invest in capital improvements, such as modern firehouses, improved park or pool facilities, or new roads and sidewalks.
Currently, Kentucky’s constitution limits cities and counties on ways to generate revenue, and when fixed costs rise, local communities are left with few options to provide the outstanding services and amenities that the public expects and deserves.
But legislation being considered during this year’s General Assembly could change that in a significant way. Local Investments for Transformation (LIFT) is a simple but powerful tool for cities and counties that want to invest in their future through the use of a temporary local option sales tax. It gives the decision-making power to the people.
This is a proven tool that works well in other places. In fact, 37 states already allow for this type of local decision-making. Kentuckians should have the same right, but we must first amend the Kentucky constitution. State Senate and House members must vote to put the question of the local option on a statewide referendum. The General Assembly should act this session so Kentuckians can vote on whether to amend the constitution in November.
How does it work? The local option allows residents to fund specific hometown capital projects with a sales tax (up to an additional 1 percent) that can be temporarily enacted. The people vote “yes” or “no” on the projects. If approved, the tax stays at home in a separate, restricted fund; it does not go to Frankfort and cannot go into the local government’s general fund.
To boot, because of this being a sales tax, there is opportunity to gain even more revenue from visitors and tourists that come to Owensboro for festivals or sporting events. It is estimated that a tax of this sort could generate between $13 and $15 million annually for our community. Most importantly, the temporary sales tax would go away when the projects are completed. And, if people vote no, there is no tax and no project.
If that constitutional amendment is approved, cities and counties could then decide to bring a local referendum to their voters to fund projects in their communities. The local option is direct democracy in action. We all know that the government closest to the people is the best government, and this is public-driven, local decision-making at its best.
In the past, Kentuckians have sent their hard earned tax dollars to Frankfort where elected leaders, through the budget process, have decided which projects get funding. Local communities crossed their fingers in the hopes the project they were counting on got the green light. The local option sales tax is a new way for communities to fund projects they want or need — and do it themselves.
JAT Mountjoy is chairman of the Greater Owensboro Chamber of Commerce’s Advocacy Committee.