BULLITT COUNTY, Ky. (WDRB) -- Ninety-five percent of the world's bourbon is made in Kentucky, and if a state tax is removed, the industry expects even more distillers in the commonwealth.

But there is fierce opposition to repealing the tax from the communities that host most of the state's barrels. 

The Kentucky House of Representatives on Monday passed House Bill 5, which would gradually repeal the so-called barrel tax on aging bourbon barrels in the state. Currently, the tax generates about $33 million a year in tax revenue.

Officials in distillery-heavy Kentucky counties, such as Nelson and Bullitt, have pleaded with lawmakers that the loss of revenue would devastate their communities.

The Southeast Bullitt Fire Department takes pride in its spirited history, making T-shirts that state "Protecting the world's finest bourbon."

SE Bourbon

The Southeast Bullitt Fire Department covers both Jim Beam and the Four Roses facility in Bullitt County. (WDRB photo) 

Chief Eric Butler said crews made 48 runs to Jim Beam last year. He estimates about a third of the department's budget comes from revenue generated by the bourbon barrel tax. The growth of the industry has helped the department hire 17 full- or part-time employees.

But, if it's repealed, they may have to make cuts.

"We're gonna lose a lot of money," Butler said. "Possibly $365,000."

If HB 5 passes, their primary source of revenue would be phased out starting in 2026, with a complete removal by 2039.

Bullitt County Judge Executive Jerry Summers said that could mean a tax increase or a cut in services.

He testified in front of a House Committee on Monday. Despite pleas from city and county officials from across "Bourbon Country," the bill passed out of the House by a 59-40 vote. 

But supporters of HB 5 point out it's unique to Kentucky.

"The barrel tax is an anti-competitive tax," said Andrew McNeill, with the Bluegrass Institute. "Startups (that) have produced bourbon must pay taxes on the aging barrels, unfinished products, for years before putting their first bottle of bourbon on the shelf."

While that hasn't stopped the number of barrels from steadily increasing, Committee Chair Rep. Jason Petrie, R-Elkton, said there are signs of a drawback. 

"In 2009, (Kentucky) had 43% of all distilling jobs in the country, and in 2021 we only had 30%," said Petrie.

Many of those distillery jobs are in Bullitt County, along with thousands of barrels. But if HB 5 passes, the department serving Jim Beam won't see a dime from the tax in future years.

"I'm disappointed," said Summers. "Brutally disappointed." 

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