Fayette school leaders decline comment on possible tax increase until Tuesday meeting

Fayette County school leaders on Tuesday morning declined to answer questions about the resolution to ask for an increase to the occupational license tax rate amid a $16 million budget deficit.

‘FCPS leadership is looking forward to discussing the OLT in great detail this evening with members of the FCPS Board of Education. To speak now would be premature. We will reserve comment until after tonight’s meeting,” said district spokesperson Dia Davidson-Smith.

The Fayette County Public Schools board is set to consider asking the Fayette Fiscal Court to increase the occupational license tax rate for schools from 0.5% to 0.75% of wages of individuals and net profits of businesses. Tuesday’s school board meeting agenda, posted on the district website Sunday afternoon, shows that Fayette Deputy Superintendent Houston Barber will present the resolution at the regular monthly meeting.

Earlier in May, district officials said all department budgets will be reduced by 20% to help address rising costs, but another $16 million must be cut from the general fund budget. Raising new revenue and reducing expenditures are necessary for the proposed tentative $848 million budget for fiscal year 2026, officials said. The current occupational license tax is expected to bring in $57 million to the district for the next fiscal year.

School board member Monica Mundy said in a Facebook post that given the short notice from the district about the resolution, she wants people to be heard. She said people can contact all board members and district staff at: feedback@fayette.kyschools.us or email her directly at: monica.mundy@fayette.kyschools.us. Mundy said people could attend the board meeting and speak during public comment at the John D. Price Administrative Building ,450 Park Place, Tuesday at 6:00 PM (arrive by 6:00 PM to sign up to speak.)

Mundy in her Facebook post said she still has unanswered questions about the resolution that she plans to raise at Tuesday’s school board meeting.

The resolution on Tuesday’s agenda says that present sources of revenue will not be sufficient to provide for the building of enough classrooms for thousands of school children, or to furnish adequate school services for all public school children in Fayette County. Any county with 300,000 residents or more can take the 0.75 %, according to the resolution.

Jefferson County Public Schools receives revenue from an occupational license tax rate of 0.75 %, JCPS district spokesperson Mark Hebert confirmed Tuesday morning.

The Fayette school board usually funds schools through property taxes. Unlike the occupational tax, which is overseen by Fayette County Fiscal Court under language from the 1974 merger that formed the Lexington-Fayette Urban County Government, the school board can set property tax rates higher to get more revenue. However, they can only take 4% more than the year before without it being subject to recall. Thanks to Fayette’s continuously growing property assessments, they can often receive a 4% increase without raising the tax rate. Even at the same tax rate, Fayette gets more money.

The Fayette Public Schools tax collection office would administer and collect the occupational license tax rate, the resolution says.

Fayette County Judge Executive Mary Diane Hanna told the Herald-Leader the occupational tax for schools is currently imposed by the Fayette County Public School district at a rate of one-half of one percent (0.5%). The Fayette County Board of Education can request the Fayette County Fiscal Court to levy a special occupational license tax which can increase by one-quarter of one percent (0.25%), Hanna said.

Hanna said Sunday that the resolution could be on the docket for a special meeting of the fiscal court, that it may be too late to get it on the docket for a June 5 meeting.

Parent Matt Vied said he intends to speak at Tuesday night’s school board meeting.

“The first thing I will be looking to hear at the meeting tonight is how much of their $16m deficit did they solve for by finding additional expenses to cut? Or are they just solving their $16m deficit with a $30m cash grab by an unprecedented increase to the OLT?,” Vied said.

Fayette County Public Schools remains in solid financial standing, Barber told the Herald-Leader earlier this month.

Much like families across the nation who have had to adjust household budgets due to inflation, rising costs, and global economic uncertainty, FCPS, like most districts across the commonwealth and country, is making prudent adjustments in response to these external pressures, Barber said.

“The projected gap in revenue vs. expenditures is exactly that — projected, based on forward-looking models and conservative budgeting assumptions. Our current year’s budget is balanced and being managed with a high level of competence, care and fiscal responsibility,” said Barber.

Aside from the occupational license tax for schools, Susan Straub, spokesperson for Lexington Mayor Linda Gorton, said Tuesday that the Lexington-Fayette Urban County Government assesses an occupational license fee of 2.25 %. The fee applies to an individual’s compensation and a businesses net profit.

The city started collecting that payroll tax in 1980 and it has stayed at 2.25 % since 1992. It currently brings in $276 million which makes up 55.2 percent of the city’s general fund budget, Straub said.