A local taxing option that has long been advocated by cities and counties throughout Kentucky but never been supported by members of the Kentucky General Assembly has been endorsed by Gov. Steve Beshear. While Beshear’s support of extending a local option sales tax to cities and counties certainly is no guarantee that legislators will rush to put the issue on the ballot, the governor’s endorsement is the biggest boost the proposal has ever enjoyed.
The Kentucky League of Cities has made enacting a constitutional amendment to give cities the option of enacting a local sales tax to be added to the state sales tax a part of its legislative agenda for many years, but the League of Cities has had no more success getting the issue on the ballot than Beshear has had in convincing legislators to allow voters a chance to weigh in on an amendment to expand gambling.
The Independent’s editorial board has long supported giving cities and counties the option of enacting a sales tax. In fact, when the Ashland Board of City Commissioners approved a payroll tax, the Independent editorialized that a local sales tax would be a better option for the city because it would not tax those who work in Ashland but live elsewhere while not taxing city residents who work elsewhere. However, at the time, we said the local sales tax was not an option and would require voter approval of state constitutional amendment.
Now Beshear says the local sales tax proposal “makes sense.” He made his comments during a luncheon sponsored by Greater Louisville Inc., which serves as the chamber of commerce for the Metro Louisville region.
The idea to create an alternative for funding local projects was recommended by a tax reform commission appointed by Beshear.
Louisville Mayor Greg Fischer and Lexington Mayor Jim Gray have called for counties to be allowed to increase the 6 percent state sales tax and earmark those funds for needed local projects. Fischer has said $90 million a year could be raised with a 1-cent tax in Jefferson County.
“With all the needs we have with our roads and sidewalks and infrastructure, that could take care of it pretty quickly because our general fund cannot,” Fischer said. “So the governor’s voice in this effort is really big.”
The proposal under discussion would require voters to cast ballots on any tax, which would have a sunset provision. “This gives people the freedom to vote on investments,” Fischer said. “It’s only new revenue if people want to vote it in on specific projects.”
Beshear has a dismal record of getting his proposals approved by legislators, and this may be another of his ideas that is ignored by legislators. However, current state law greatly limits the type of taxes cities and counties can enact. While the payroll tax is an option used by cities and counties throughout the state, a local income tax, like the local sales tax, is banned by the state constitution,
Cities and counties need more tax options. A sales tax is a reasonable one. While banned in Kentucky, local sales taxes are the largest source of revenue for cities in neighboring Tennessee, and a voter-approved sales tax in Cincinnati is paying for both Great American Ballpark and Paul Brown Stadium.
In supporting the local sales tax option, we recognize it faces an uphill battle in the Kentucky General Assembly to even get on the ballot, and if it is, it won’t be easy to get voters to give cities and counties a new way to raise their taxes. Still, it’s a good idea.