LOUISVILLE, Ky. (WDRB) – A bipartisan bill designed to give local governments in Kentucky more flexibility in the types of taxes they can levy failed on the state House floor Thursday after Democrats voted “pass,” in part to protest their lack of influence in the Republican-controlled chamber.
House Bill 475 married urban Democrats’ desire for more tax flexibility for Louisville and Lexington with Republicans’ desire to cut down on city and county taxes on workers’ wages and on business profits, which they say makes the state less competitive in economic development.
The bill would not have changed any taxes, but instead placed a question on the November ballot as to whether to amend the Kentucky constitution to give the legislature more power to tinker with city and county taxes.
After a successful referendum, the legislature would have carte blanche to overhaul the local tax system in 2021 or later.
But HB 475 fell short of the 60-vote threshold required to advance a constitutional amendment, yielding 49 ‘yes’ votes and 17 ‘no.’
Democrats largely passed, including several who had signed onto the bill as co-sponsors.
The last-minute revolt sparked sharp words from Republicans, who hold a super-majority of 62 members in the chamber, with Rep. Jerry Miller of eastern Jefferson County calling it a “travesty” and Rep. Randy Bridges of Paducah calling the Democrats “weak” and “an embarrassment.”
"You want to be a true leader? Suck it up," Bridges said.
Rep. Joni Jenkins, D-Shively, the minority floor leader, said the Democrats’ decision to withhold their votes was to protest the fact that Republicans typically ignore their preferences. Democrats hold only 38 seats in the 100-member body.
Democrats often are told, Jenkins said, “You are in the super-minority and you don’t count; we don’t need you … You know what, we do count … Everyone who is in this seat counts.”
Rep. Angie Hatton, D-Whitesburg, said, “There are some people in this room who are really used to getting told ‘no.’ Sometimes you lose … You never need our votes; you don’t care what we think.”
House Speaker David Osborne, a Republican from Oldham County, said the vote shows Democrats “care more about making points than you do about making policy and helping the people of this commonwealth.”
The bill’s failure comes despite support from influential groups like state associations for cities and counties and chambers of commerce.
“Greater Louisville Inc. is disappointed that many members of the Kentucky House of Representatives refused to support the simple concept of allowing cities to invest in themselves by not advancing House Bill 475,” said Sarah Davasher-Wisdom, CEO of GLI, the Louisville chamber of commerce.
Other Democrats said that while cities such as Louisville and Lexington desperately need more ways to raise tax revenue, they’re concerned about opening the door to “regressive” local taxes that hit lower-income Kentuckians harder than higher-income earners.
One possibility from a local tax overhaul, for example, is cities and counties getting the power to levy their own sales taxes on top of the state’s 6% rate.
Other Democrats said their refusal to advance the bill was in part to protest the lack of state funding for Louisville interests in the two-year budget that Republicans unveiled this week.
The budget cuts Louisville’s Waterfront Development Corp. and provides for only two new school buses for Jefferson County, the state’s largest district, Louisville Rep. Mary Lou Marzian said.
“Jefferson County really got the shaft in this budget,” she said.
Kentucky is one of only 17 states that allow local governments to tax income, said Rep. Michael Meredith, R-Oakland, the bill’s primary sponsor, in committee testimony last month.
Employees who live and work in Jefferson County pay 2.2% of their gross wages in local taxes, which are split between Louisville Metro government, Jefferson County Public Schools and the Transit Authority of River City. Employees who work in Jefferson County but don’t live in it pay 1.45%.