LOUISVILLE, Ky. (WDRB) — A controversial repeal of Kentucky’s tax on aging bourbon barrels is moving in the final hours of the annual legislative session on Thursday night.
A modified version of the repeal long sought by distillers and their trade group passed the Senate on Thursday. The House already passed House Bill 5, but it will need to concur with the Senate's last-minute changes to the measure before midnight Thursday to send the bill to Gov. Andy Beshear.
Bourbon producers want to eliminate what they call an onerous and discriminatory tax while acknowledging the industry’s burgeoning growth with billions of dollars in investment over the last decade.
But city and county officials in bourbon counties like Nelson, Bullitt and Marion are vehemently opposed, saying it will deprive their communities of tax revenue needed for roads, fire protection, water and other public services necessitated by the distilleries.
“You have a very large industry — something that we're known for around the world — somewhat at odds with local governments in the way that they're funded,” Republican Sen. Chris McDaniel, chairman of the Senate budget committee, told reporters Thursday afternoon. “And so, when you do these things, they do deserve a very robust discussion and it is a hard vote for most members.”
The bill passed the Republican-controlled Senate 24-13.
The modified bill unveiled by McDaniel on Thursday would phase out the tax over 20 years, up from the original 15 years, and continue the tax on distillers whose warehouses are also exempt from general property taxes thanks to previous county incentives.
While the industry is couching the modified bill as a compromise, local officials from Bourbon Country still adamantly oppose the bill.
“We've been fighting this since day one. It will devastate our community,” said Josh Ballard, commissioner of the city of Loretto, home of Beam Suntory’s Maker’s Mark. “Sixty percent of our budget comes from the bourbon barrel tax. And Maker's Mark, when they built the warehouses, promised that they would pay this tax bill. And they’re here today taking away that promise.”
WDRB's Monica Harkins contributed to this story from Frankfort.
