FRANKFORT — State lawmakers will discuss Wednesday a proposal to give residents the authority, by referendum, to implement a temporary sales tax that would finance specific projects in their communities.
New parks, sidewalks, roads, business districts, entertainment districts and sports venues are examples of how revenue from a temporary sales tax can be used, said House Local Government Committee Chairman Steve Riggs, D-Louisville, who will lead the Sept. 25 meeting of the Interim Joint Committee on Local Government.
A temporary sales tax for local government projects is allowed in 37 states, according to Local Investments for Transformation, or LIFT. Kentucky's sales tax is 6 percent.
If a community were to vote to raise its sales tax temporarily by one cent or less, the resulting tax would be less than the sales tax charged in most of Kentucky's surrounding states, Riggs said.
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Legislation allowing a temporary sales tax for specific projects was filed during the 2013 General Assembly in the Kentucky Senate but was not taken up for a vote. Similar legislation is likely to be considered in the 2014 General Assembly, which starts Jan. 7.
Among those signed up to speak at Wednesday's meeting are Louisville Metro Mayor Greg Fischer, who has spent more than a year encouraging state legislators to place the amendment on statewide ballot; Kentucky Center for Economic Policy Executive Director Jason Bailey; LaRue County Judge-Executive Tommy Turner; and Richard Dobson of the Kentucky Office of Sales and Excise Taxes at the Finance and Revenue Cabinet.
The first step toward allowing a temporary sales tax at the local level is passage of a constitutional amendment by the Kentucky General Assembly. The amendment would have to be put on the next general election ballot in November 2014 and approved by a majority of voters before a temporary tax increase would be possible.
Passage of the amendment would not allow a local government to levy an extra one cent or less temporary sales tax. That would require approval of local voters.
The new revenue would be allowed only for a specific project, and it would no longer be collected once the project was completed.
A proposed constitutional amendment to give Kentucky the option of implementing a temporary sales tax increase was endorsed last November by the Governor's Blue Ribbon Commission on Tax Reform.
Wednesday's meeting of the Interim Joint Committee on Local Government will begin at 10 a.m. in room 171 of the State Capitol Annex in Frankfort. The committee expects to hear testimony from those on both sides of the issue.