UPDATED: Despite outcry, FCPS board decides to hold an occupational license tax hearing

It could be round two for Fayette County Public Schools’ effort to hike Lexington’s occupational license tax.

Despite strong opposition to raising the tax to funnel more money to the cash-strapped district, the school board on Monday night approved a Sept. 5 public hearing to discuss a potential increase.

Such a meeting would allow the board to legally propose an occupational license tax increase, district officials said. But it would not mean the district is taking a position on a potential bump to the tax, said school board chairman Tyler Murphy.

The Sept. 5 hearing comes as the district faces $16 million budget shortfall, and the district recently revealed its contingency fund is much smaller than originally expected.

Board member Amanda Ferguson refused to join four other members in supporting the hearing. She rejected both the call for the hearing and any talk of a tax increase, she said.

“I have no interest in setting a public hearing for a tax increase because I have not heard from anyone in the community that supports it,” she said.

Board member Monica Mundy said she had not heard from anyone who supports the tax increase either. But she did say there was merit in having a meeting where people could talk about the budget and voice their opinion either way — that would be better than not giving them the opportunity.

“I can’t in good faith support it,” Mundy said.

Board member Penny Christian said she doesn’t know what her final vote on the occupational tax increase would be, but, “We have to be realistic. ... We can’t ignore the option that may be the most unpopular.”

Raising the occupational license tax rate was a controversial proposal put on hold earlier this summer after some board members and community leaders said district officials tried to push the measure on the community without an extensive discussion.

Kentucky Attorney General Russell Coleman declared the process was unlawful.

According to Coleman’s opinion, the school board’s 3-2 vote to ask the Fayette Fiscal Court to increase school tax rates on residents and businesses’ net income from 0.5% to 0.75% was improper.

Under state law, school boards must notify the public and hold a formal hearing before voting on new or increased taxes, Coleman said.

This summer, the least popular recommendation of a budget solutions work group composed mainly of community members was to increase the occupational license tax, which officials from Keeneland, the University of Kentucky and Commerce Lex rejected.

“We can’t tax our way out of this process. The reality is that the budget is structurally imbalanced,” representatives from the University of Kentucky and Commerce Lexington wrote in a July 30 op-ed column submitted to the Herald-Leader.

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

On Monday night, Hunter Stout, Keeneland’s chief financial officer, told board members, “There’s no need to rush this tax. It should be the last option.”

It was the budget solutions work group’s recommendation to take money from the district’s contingency fund to solve a $16 million shortfall that triggered Superintendent Demetrus Liggins’ revelation that the contingency fund’s balance is millions lower than previously thought.

School officials have said on the district’s website the projected increase on the current rate would generate $27 million to $32 million per year. Adoption of this new rate by the fiscal court would go into effect Jan. 1, 2026. The first rate increase of one-half of a fiscal year (Jan. 1-June 30, 2026) would provide an estimated $13.5 million to $16 million, officials have said.

If approved, the average taxpayer is expected to pay an additional $13 per month, which means an additional $3.25 per week.

Carla Blanton, the chair of Commerce Lexington, on behalf of that group’s members who served on the FCPS Budget Solutions Work Group, had asked the school district not to pursue the Occupational License Tax increase.

“We are disappointed and disheartened that the presentation at last night’s school board meeting so summarily dismissed the recommendations of the work group, which comprises members of all segments of the community and was selected by FCPS,” Blanton said Tuesday. “In particular, the focus on – and characterization of -- the occupational license tax being a recommendation of the work group and the only solution without a negative consequence was misrepresented to the board. The tax was, by far, the lowest ranked option of a group that was, again, hand-picked by school leadership.”

Nevertheless, Blanton said her group would remain committed to doing the hard work of finding small budget cuts that don’t impact students and getting to the bottom of the status of the contingency, which must be part of the solution. She said they will work with FCPS on long-term solutions to help it regain fiscal strength.

Fayette County Schools officials on Tuesday night released a statement that said:

“Last night (August 18), the Board was presented all ten recommendations of the Budget Solutions Workgroup, thanking the group for their work. Board members asked thoughtful, specific, and probing questions related to each recommendation and their impacts on student learning. Gathering answers will require the administration to conduct more research, do a deeper dive, and return to the Board with more information.

No decisions were made last night. The Board plans to hold a special called meeting on Sept. 5th to hear this information, have more discussion, and solicit more public input. As was shared last night, no decisions will be made on Sept. 5th and the Board remains focused on receiving all relevant information.”

This story was originally published August 18, 2025 at 10:51 PM.