Louisville mayor's sales tax proposal wins backing from Kentucky - WDRB 41 Louisville News

Louisville mayor's sales tax proposal wins backing from Kentucky Chamber

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FRANKFORT, Ky. (WDRB) -- Louisville Mayor Greg Fischer's local option sales tax proposal has won the support of Kentucky's largest business organization, the Kentucky Chamber of Commerce.

The chamber's board voted to endorse the proposal – which would let cities and counties implement a temporary sales tax increase via a voter referendum – on Thursday just before Fischer appeared before a legislative committee in Frankfort to discuss the idea.

In Louisville, the tax would likely be used for improved public transit, Fischer said during the hearing.

The proposal would amend the state constitution to allow cities and counties to implement a temporary sales tax of up to 1 percent to pay for local public projects. The extra revenue would be dedicated to a particular project or a set of projects, and the tax would go away once the projects were funded unless reauthorized by the local government's voters.

The proposal faces steep hurdles: a constitutional amendment requires approval by super-majorities of the Kentucky House and Senate and then by voters in a statewide referendum.

Once those steps are taken, city councils and county commissions could come up with projects, which their voters would be asked to approve in a local referendum.

The proposed tax elicited mix opinions among lawmakers at Thursday's hearing of the joint interim Appropriations and Revenue committee.

State Sen. Ernie Harris of Crestwood said the tax might find "broad support" – especially now with the endorsement of the Kentucky Chamber – if it were coupled with a weakening of the state's prevailing wage laws that set minimum pay for construction and trades workers on public projects.

"This looks like a great thing, to tie them together," Harris said.

Fischer demurred when Harris asked his opinion on prevailing wage laws. He said prevailing wages are a separate issue and that local governments will abide by whatever standards the state sets.

Rep. Tom Buford of Nicholasville pressed Fischer on whether the 83 smaller cities in Jefferson County would have the power to enact their own sales taxes under the legislation, and what would happen if a county and a city within each wanted to implement sales taxes.

Fischer said the intent is not to have "stackable" taxes and said the language would be clarified to be prevent it. He also said the smaller cities in Jefferson County would have to seek Metro Council approval to get a local sales tax on the ballot, making it unlikely to happen.

Rep. Jim Wayne of Louisville, one of the General Assembly's most liberal members, said he doesn't support the proposal because sales taxes hit the poor harder than they do the wealthy.

"This one, I think, is really an imposition on our most vulnerable citizens," he said.

Lawmakers also wrestled with the fact that the local option would take some power out of their own hands, as cities and counties could fund their projects without going through the General Assembly for an appropriation. 

Sen. Robin Webb of Grayson said the idea of voters approving projects individually, rather than lawmakers deciding how to allocate money centrally, doesn't sit well with her.

"We are elected to make these policy decisions…I have a hesitancy to pass that buck and abdicate our legislative priority by referendum," she said.

But Rep. Kelly Flood of Lexington, a supporter of the sales tax idea, said it's local leaders who understand the needs of their communities.

"It's time for us to recognize they are really on the frontlines…this is the time for us to get out of the way," she said.

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