This weekend, the Lexington Herald-Leader You Decide, Kentucky! is featuring an op-ed from YDK! co-chairs Mayor Suzie Barton Rasmus and Carter Hendricks.  We’d encourage you to check it out and get involved in the effort to modernize the rules governing how Kentucky’s cities and counties provide for their communities to continue to grow and prosper.

Kentucky’s counties and cities should decide what local tax structures work best for them

Kentucky’s financial health was in the news recently with reports the state’s annual revenues didn’t meet the required triggers to reduce the state’s income tax by another half-percent. Lawmakers say the tax reforms passed in 2022 are working, with Kentuckians seeing a drop in their income taxes to just 4 percent, with another drop to 3.5% likely in the future. While the General Assembly has been focused on reforming our tax codes at the state level, as Co-Chairs of You Decide, Kentucky!, it’s our job to remind Kentuckians we cannot achieve true comprehensive tax reform without addressing income taxes at the local level. We urge lawmakers to put a constitutional amendment on the ballot to allow for local tax reform, which will give our cities and counties the tools to provide local services and public safety that will improve the daily quality of life in our neighborhoods.

For decades, ‘Blue Ribbon Panels’ and ‘Special Commissions’ have studied Kentucky’s revenue code. They have nearly unanimously recommended some form of comprehensive tax reform to widen the base, allow for natural growth, and stimulate business investment. In 2018, the General Assembly began pushing towards making comprehensive reform a reality, passing the first of what have now been several reforms at the state level, with the aim of reducing and ultimately eliminating Kentucky’s personal income tax.

With that effort well under way, now is the time for the Legislature to tackle Kentucky’s antiquated, inefficient, and inadequate local tax structure.

Cities and counties around the state are struggling to make ends meet.  Counties have a variety of constitutional and statutory financial responsibilities, ranging from 911 service and jails while cities pay for things such as pools, parks, homeless and drug treatment programs, and other services vital to community members.  Still, both cities and counties are hamstrung with specific and limited sets of tools available to them to generate the revenue needed to fund their obligations and programs. There is no flexibility in how our local governments can raise revenue, resulting in budget cuts, growing deficits, and rising local taxes.

From the coal fields in the east to the river counties in the west, Kentucky’s cities and counties have varied economies and different needs.  Why does it make any sense to force them all to generate revenue the same way?  The right revenue policies for Louisville could cripple a coal community like Pike County. Likewise, revenue plans that could help a city or county along the interstate like Whitley County or Paducah, would do nothing for a more rural community like Clay County.  Our current policies result in many of Kentucky’s cities and counties having to go to the General Assembly with their hands out at budget time or whenever they need innovation or big investment.  With this long-needed reform, we can empower them to stand on their own.

For several years, Rep. Michael Meredith has been a champion for this issue in the General Assembly, pushing for a state Constitutional amendment to allow the General Assembly the ability to delegate more authority and flexibility to local governments.  The idea is backed by a multi-partisan coalition of mayors, county judges, and other local leaders from across the state, regardless of region or economic status. The time has come to empower our local communities so they can become the best versions of themselves – so that Kentucky can finally reach its full potential.

ter what you may hear, this initiative isn’t about raising taxes – it’s about taxing right. Every community has different needs, wants, and priorities. It is long past time we realize it and allow policymakers to craft local revenue policies that reflect our communities today.  Limiting all of Kentucky’s 120 counties and over 370 cities to the same set of tools makes about as much sense as forcing the UK, Louisville, WKU and EKU football teams to all use the same playbooks.