UK, Keeneland, business leaders urge Fayette Schools: Don’t raise taxes

Fayette County Public Schools got a stern message from local business leaders and University of Kentucky officials Wednesday: You cannot tax your way out of a financial crisis.

Leaders across the city are encouraging school board members to close a $16 million deficit without increasing the Occupational License Tax.

The recommendation to raise the tax, which created controversy earlier this summer, was one of 10 budget-crunch solutions the district’s budget work group proposed Tuesday night. It was the lowest recommendation on the list.

“We can’t tax our way out of this process. The reality is that the budget is structurally imbalanced,” representatives from UK and Commerce Lexington wrote in an op-ed column to the Herald-Leader Wednesday morning.

“Bringing balance to the revenues and expenses is the only way to achieve long-term stability and sustainability.”

The column was signed by Jay Blanton and Eric Monday, representing the University of Kentucky, and Commerce Lexington members, including its board chair, Carla Blanton.

Commerce Lexington representatives on the FCPS budget working group included Hunter Stout of Keeneland, Stephen Behnke of Lexington Clinic and Rob Shear of the company SRC.

“By working together with the district and engaged community representatives, Commerce Lexington believes that a short-term solution for the next budget is achievable while maintaining the Occupational License Tax at its current amount,” the group said in a Wednesday news release.

“Reducing the contingency fund, while still keeping it at the legally required amount, will resolve the deficit and provide an additional cushion. In addition, cost-saving measures should be implemented,” the statement said.

District officials did not respond to questions Wednesday.

On Tuesday night, district leaders shared a gloomy forecast for the district if a new revenue stream to bridge the deficit is not funded.

On that list: Painful staff cuts, reductions in student services, larger class sizes, fewer programs for struggling readers, more long-term substitute teachers and deferred building maintenance, among other items.

Deputy Superintendent Houston Barber told community leaders Tuesday: “We cannot sustain competitive salaries, absorb inflation, or deliver the education our students deserve without new revenue.”

Fayette County Schools has about $42 million in its budget contingency fund, about 6 percent of its budget. The top recommendation of the work group was to reduce the amount in the contingency fund to address the budget shortfall.

To address the gap in the $848 million budget for fiscal year 2026, which began July 1, the school board earlier this year voted to increase the local Occupational License Tax from 0.5% to 0.75% on people who live and work in Fayette County – generating over $30 million annually.

However, after Kentucky Attorney General Russell Coleman said in an opinion that the proper notice was not given and a public hearing was not held, FCPS leaders paused the implementation of the tax proposal and formed the budget solutions working group.

Its mission: Review the budget, explore cost savings and recommend solutions.

The Fayette school board is to revisit the budget issue on Aug. 18. District leaders told the work group Tuesday night that without new revenue, the school district faces drastic cuts. They have previously said the district needs the additional revenue from the proposed tax increase.

The Commerce Lexington statement said a thriving workforce and community require a strong public school system.

“We want to ensure that Fayette County students and educators have the resources they need for continued success,” the statement said.

In the past four years, FCPS students are recovering learning loss in reading at three times the national average and outpacing the national average in math recovery, graduation rates are steadily increasing, the number of students taking at least one college-level class has nearly tripled, and FCPS produces 32 percent of the state’s highest-performing students with 6.5 percent of Kentucky’s total student enrollment, the Commerce Lexington statement said.

Commerce Lexington officials remain committed to working with FCPS to find balance in the budget through additional cost savings and efficiencies.

“On behalf of our 1,800 members who represent a substantial number of employees in Fayette County, we believe our community can solve this challenge in a way that maintains high standards for our students while not adding to the cost burdens of working families or creating barriers to economic development and job recruitment,” the Commerce Lexington statement said.

This is a developing story and will be updated.

This story was originally published July 30, 2025 at 12:23 PM.