Skip to Main Content

Local Option Sales Tax

Local Option Sales Tax

Bill and his guests discuss local option sales tax. Guests: State Sen. Paul Hornback, R-Shelbyville, chair of the Senate Agriculture Committee; State Rep. Jim Wayne, D-Louisville, vice chair of the House Local Government Committee; Louisville Mayor Greg Fischer; and Tod Griffin, president of the Kentucky Retail Federation.
S22 E10 Length 56:33 Premiere: 2.2.15

Local Option Sales Tax: Pros and Cons

Some use the descriptive moniker of local option sales tax, or LOST.

Others prefer to avoid the negative connotations of a tax by calling the idea “local investments for transformation,” or LIFT.

Whatever it’s called, a bipartisan coalition of political, business, and civic leaders is making another push in this year’s legislative session to give Kentucky communities and counties a new way to generate money to fund one-time capital projects. On Monday’s edition of Kentucky Tonight, those for and against the taxing proposal explained their positions on the idea.

How the Proposal Would Work
Local town councils or county fiscal courts could propose to levy an additional penny on sales taxes collected in their jurisdictions to fund a specific capital project such as a sewer line, community center, or broadband Internet service.

Once a project has been proposed, local citizens would have to vote to approve the tax. If passed by a majority of those voters, the tax money raised could only be used for that project, and the tax would end once construction of the project is completed.

Because local jurisdictions don’t currently have authority to impose a general sales tax, the state legislature would have to approve the local taxing proposal (by a 60-percent majority of both chambers), and then a majority of Kentuckians would have to approve the change as an amendment to the state constitution. (The next time a constitutional amendment can go on the ballot is in the 2016 general election.)

If the constitutional amendment is passed, citizens would vote on proposed local projects in subsequent general elections. The additional tax would not be levied on food, medicine, utilities, or cars and farm implements.

A Tool to be More Competitive
With local communities big and small strapped for financial resources, Louisville Mayor Greg Fisher says metro areas like his and Lexington as well as rural Kentucky towns and counties need additional sources of revenue. He says 37 states, including most of the commonwealth’s neighbors, already permit this local tax option.

The mayor explains that he and his colleagues prefer the local approach to an increase in the state sales tax because it gives local citizens a voice in the decision-making process; it keeps the money in the community in which it was raised instead of going into the state’s general fund; and the local tax would end at a specific time whereas a statewide tax would not.

He notes that local option taxes have been used to fund projects as large as riverfront revitalization in Oklahoma City, down to a sewer expansion project in New Ellenton, South Carolina, population about 2,000. Fisher says capital projects like these can generate an additional $5 in private investment for every $1 of tax money invested, and are vital to the future of Louisville.

“It’s a matter of competitiveness for us in growing our quality of place,” Fisher says. “The local option creates opportunities, it creates jobs… Without it, we’re falling behind.”

A Heavier Burden on the Poor
While he acknowledges that municipalities don’t have enough revenues, state Rep. Jim Wayne (D-Louisville) says the local option sales tax adds an unfair burden to an already regressive system of taxation in the commonwealth. Wayne explains that poor citizens pay a larger proportion of their income as sales taxes.

“Wealthy people like this because every dollar they earn, they’re not going to spend,” Wayne says. “Every dollar that someone who’s in the bottom 20 percent of income earners (and that’s $16,000 or below), they’re going to spend every dollar they have and so every dollar will be taxed.”

Wayne was part of Gov. Beshear’s Blue Ribbon Commission on Tax Reform, and he says that group actually recommended the local option but coupled it with an Earned Income Tax Credit to help poor and middle class families. Without the EITC to offset the extra burden, Wayne says he would rather lawmakers explore other options for additional revenues. Short of comprehensive tax reform, Wayne says other options could include increasing local property taxes, or levying new local taxes on income, real estate transfers, or stock and bond trades, which he says would have a greater impact on the rich and would be more progressive forms of taxation.

The Purest Form of Democracy
Revenue issues are especially challenging in small towns and rural counties with smaller tax bases, according to state Sen. Paul Hornback. The Shelbyville Republican says communities like his must offer an array of amenities to attract new businesses, and the local option tax would help towns fund things like parks, community centers, and arts venues.

Unlike a general increase in property taxes or restaurant taxes, Hornback says the local option gives the citizens of that jurisdiction a voice in what specific projects are proposed and whether the extra sales tax should be levied to fund it. He contends making those funding decisions locally is better than having them come from Frankfort or Washington. Quoting Senate President Robert Stivers, Hornback calls the local option tax “the purest form of democracy there is.”

In recent meetings across his north-central Kentucky district, Hornback says he encountered no opposition to the tax proposal. In fact, he says communities already have projects in mind they’d like to fund. Hornback says Bedford wants to improve its riverfront, Carrollton wants to invest in its community college, and Henry County wants to update its industrial park.

“You don’t look at it as a tax increase, you look at it as an investment in the community,” Hornback says.

Business and Consumer Concerns
A key organization leading the opposition to the local tax plan is the Kentucky Retail Federation. Its president, Tod Griffin, contends the tax would give
out-of-state businesses an advantage over Kentucky retailers. For example, Internet-based companies without a presence in the commonwealth would not have to collect the additional tax. Griffin says consumers are already inclined to travel to other localities or shop online if they can save money from a lower tax rate.

Griffin also contends the proposal would increase the cost of doing business for Kentucky companies. He says those entities would have to pay a higher local tax on their own purchases, and those businesses would incur administrative costs to collect the short-term tax from their customers.

“Retailers like to operate in Kentucky because we have a state sales tax. It’s very simple to understand,” Griffin explains. “We don’t have this maze of local taxes and local jurisdictions out there right now, so from a business perspective it really adds a lot of complexity.”

Finally, Griffin worries about the impact that a higher tax, even one that is time limited, will have on consumers. He notes studies that show a 1 percent tax increase can result in a 4 percent decrease in sales.

The opinions expressed on Kentucky Tonight and in this program synopsis are the responsibility of the participants and do not necessarily reflect those of KET.

 

Program Details

Kentucky Tonight

About Kentucky Tonight

Kentucky Tonight, hosted by Renee Shaw, is an hour-long, weekly public affairs discussion program broadcasted live on Monday evenings. Discussions focus on issues confronting Kentuckians.

TV Schedules

Jump to Recent Airdates

Upcoming

Voting Rights and Election Laws

Host Renee Shaw talks with her guests about voting rights and election laws. Scheduled guests: Secretary of State Michael Adams (R); Joshua A. Douglas, University of Kentucky election law professor; State Rep. Jennifer Decker, Republican from Waddy; State Rep. Buddy Wheatley, Democrat from Covington; Corey Shapiro, legal director of the ACLU of Kentucky; and James Young, former elections director in Louisville.

  • Wednesday April 21, 2021 6:00 pm ET on KETKY
  • Wednesday April 21, 2021 5:00 pm CT on KETKY

Kentucky Tonight

  • Monday April 26, 2021 8:00 pm ET on KET
  • Monday April 26, 2021 7:00 pm CT on KET
  • Tuesday April 27, 2021 6:00 am ET on KETKY
  • Tuesday April 27, 2021 5:00 am CT on KETKY
  • Tuesday April 27, 2021 2:30 pm ET on KETKY
  • Tuesday April 27, 2021 1:30 pm CT on KETKY
  • Tuesday April 27, 2021 11:00 pm ET on KETKY
  • Tuesday April 27, 2021 10:00 pm CT on KETKY
  • Wednesday April 28, 2021 1:00 am ET on KETKY
  • Wednesday April 28, 2021 12:00 am CT on KETKY
  • Wednesday April 28, 2021 9:30 am ET on KETKY
  • Wednesday April 28, 2021 8:30 am CT on KETKY
  • Wednesday April 28, 2021 6:00 pm ET on KETKY
  • Wednesday April 28, 2021 5:00 pm CT on KETKY

Kentucky Tonight

  • Monday May 3, 2021 8:00 pm ET on KET
  • Monday May 3, 2021 7:00 pm CT on KET
  • Tuesday May 4, 2021 6:00 am ET on KETKY
  • Tuesday May 4, 2021 5:00 am CT on KETKY
  • Tuesday May 4, 2021 2:30 pm ET on KETKY
  • Tuesday May 4, 2021 1:30 pm CT on KETKY
  • Tuesday May 4, 2021 11:00 pm ET on KETKY
  • Tuesday May 4, 2021 10:00 pm CT on KETKY
  • Wednesday May 5, 2021 1:00 am ET on KETKY
  • Wednesday May 5, 2021 12:00 am CT on KETKY
  • Wednesday May 5, 2021 9:30 am ET on KETKY
  • Wednesday May 5, 2021 8:30 am CT on KETKY
  • Wednesday May 5, 2021 6:00 pm ET on KETKY
  • Wednesday May 5, 2021 5:00 pm CT on KETKY

Kentucky Tonight

  • Monday May 10, 2021 8:00 pm ET on KET
  • Monday May 10, 2021 7:00 pm CT on KET
  • Tuesday May 11, 2021 6:00 am ET on KETKY
  • Tuesday May 11, 2021 5:00 am CT on KETKY
  • Tuesday May 11, 2021 2:30 pm ET on KETKY
  • Tuesday May 11, 2021 1:30 pm CT on KETKY
  • Tuesday May 11, 2021 11:00 pm ET on KETKY
  • Tuesday May 11, 2021 10:00 pm CT on KETKY
  • Wednesday May 12, 2021 1:00 am ET on KETKY
  • Wednesday May 12, 2021 12:00 am CT on KETKY
  • Wednesday May 12, 2021 9:30 am ET on KETKY
  • Wednesday May 12, 2021 8:30 am CT on KETKY
  • Wednesday May 12, 2021 6:00 pm ET on KETKY
  • Wednesday May 12, 2021 5:00 pm CT on KETKY

Kentucky Tonight

  • Monday May 17, 2021 8:00 pm ET on KET
  • Monday May 17, 2021 7:00 pm CT on KET
  • Tuesday May 18, 2021 6:00 am ET on KETKY
  • Tuesday May 18, 2021 5:00 am CT on KETKY
  • Tuesday May 18, 2021 2:30 pm ET on KETKY
  • Tuesday May 18, 2021 1:30 pm CT on KETKY
  • Tuesday May 18, 2021 11:00 pm ET on KETKY
  • Tuesday May 18, 2021 10:00 pm CT on KETKY
  • Wednesday May 19, 2021 1:00 am ET on KETKY
  • Wednesday May 19, 2021 12:00 am CT on KETKY
  • Wednesday May 19, 2021 9:30 am ET on KETKY
  • Wednesday May 19, 2021 8:30 am CT on KETKY
  • Wednesday May 19, 2021 6:00 pm ET on KETKY
  • Wednesday May 19, 2021 5:00 pm CT on KETKY
Jump to Upcoming Airdates

Recent

Voting Rights and Election Laws

  • Wednesday April 21, 2021 1:00 am ET on KETKY
  • Wednesday April 21, 2021 12:00 am CT on KETKY
  • Tuesday April 20, 2021 11:00 pm ET on KETKY
  • Tuesday April 20, 2021 10:00 pm CT on KETKY
  • Tuesday April 20, 2021 2:30 pm ET on KETKY
  • Tuesday April 20, 2021 1:30 pm CT on KETKY
  • Tuesday April 20, 2021 6:00 am ET on KETKY
  • Tuesday April 20, 2021 5:00 am CT on KETKY
  • Monday April 19, 2021 8:00 pm ET on KET
  • Monday April 19, 2021 7:00 pm CT on KET

Recap of the 2021 Kentucky General Assembly

  • Wednesday April 14, 2021 6:00 pm ET on KETKY
  • Wednesday April 14, 2021 5:00 pm CT on KETKY
  • Wednesday April 14, 2021 9:30 am ET on KETKY
  • Wednesday April 14, 2021 8:30 am CT on KETKY
  • Wednesday April 14, 2021 1:00 am ET on KETKY
  • Wednesday April 14, 2021 12:00 am CT on KETKY
  • Tuesday April 13, 2021 11:00 pm ET on KETKY
  • Tuesday April 13, 2021 10:00 pm CT on KETKY
  • Tuesday April 13, 2021 2:30 pm ET on KETKY
  • Tuesday April 13, 2021 1:30 pm CT on KETKY
  • Tuesday April 13, 2021 6:00 am ET on KETKY
  • Tuesday April 13, 2021 5:00 am CT on KETKY
  • Monday April 12, 2021 8:00 pm ET on KET
  • Monday April 12, 2021 7:00 pm CT on KET

2021 Legislative Session

  • Wednesday March 31, 2021 6:00 pm ET on KETKY
  • Wednesday March 31, 2021 5:00 pm CT on KETKY
  • Wednesday March 31, 2021 9:30 am ET on KETKY
  • Wednesday March 31, 2021 8:30 am CT on KETKY
  • Wednesday March 31, 2021 1:00 am ET on KETKY
  • Wednesday March 31, 2021 12:00 am CT on KETKY
  • Tuesday March 30, 2021 11:48 pm ET on KETKY
  • Tuesday March 30, 2021 10:48 pm CT on KETKY
  • Tuesday March 30, 2021 6:00 am ET on KETKY
  • Tuesday March 30, 2021 5:00 am CT on KETKY
  • Monday March 29, 2021 8:00 pm ET on KET
  • Monday March 29, 2021 7:00 pm CT on KET

School Choice

  • Wednesday March 24, 2021 6:00 pm ET on KETKY
  • Wednesday March 24, 2021 5:00 pm CT on KETKY
  • Wednesday March 24, 2021 9:30 am ET on KETKY
  • Wednesday March 24, 2021 8:30 am CT on KETKY
  • Wednesday March 24, 2021 1:00 am ET on KETKY
  • Wednesday March 24, 2021 12:00 am CT on KETKY
  • Tuesday March 23, 2021 11:00 pm ET on KETKY
  • Tuesday March 23, 2021 10:00 pm CT on KETKY
  • Tuesday March 23, 2021 2:30 pm ET on KETKY
  • Tuesday March 23, 2021 1:30 pm CT on KETKY
  • Tuesday March 23, 2021 6:00 am ET on KETKY
  • Tuesday March 23, 2021 5:00 am CT on KETKY
  • Monday March 22, 2021 8:00 pm ET on KET
  • Monday March 22, 2021 7:00 pm CT on KET
Top

Season 22 Episodes

Candidates for Governor

S22 E43 Length 56:40 Premiere Date 10.26.15

Candidates for Lieutenant Governor

S22 E42 Length 56:33 Premiere Date 10.18.15

Candidates for Attorney General

S22 E41 Length 56:33 Premiere Date 10.12.15

Candidates for Auditor of Public Accounts

S22 E40 Length 56:33 Premiere Date 10.5.15

Candidates for Commissioner of Agriculture

S22 E39 Length 56:33 Premiere Date 9.28.15

Candidates for Secretary of State

S22 E38 Length 56:34 Premiere Date 9.21.15

Candidates for State Treasurer

S22 E37 Length 56:33 Premiere Date 9.14.15

Issues Impacting the 2015 Election

S22 E36 Length 56:36 Premiere Date 8.24.15

Health Care: A Reality Check

S22 E35 Length 56:33 Premiere Date 8.16.15

Tough Choices Ahead for State Budget

S22 E34 Length 56:33 Premiere Date 8.9.15

Jobs and Wages: Behind the Numbers

S22 E32 Length 56:33 Premiere Date 7.26.15

Tax Reform: The Issue That Won't Go Away

S22 E31 Length 56:33 Premiere Date 7.19.15

LGBT Rights and Religious Liberty

S22 E30 Length 56:33 Premiere Date 7.12.15

Postsecondary Education

S22 E29 Length 56:33 Premiere Date 7.5.15

Discussion on Public Employee Pensions

S22 E28 Length 56:33 Premiere Date 6.28.15

Education Discussion

S22 E27 Length 56:35 Premiere Date 6.21.15

Energy and the Environment

S22 E26 Length 56:34 Premiere Date 6.14.15

Transportation Issues Hit Bumpy Road

S22 E25 Length 56:33 Premiere Date 6.7.15

Analysis of the 2015 Primary

S22 E24 Length 56:35 Premiere Date 5.31.15

Kentucky Republican Governor Primary

S22 E22 Length 56:33 Premiere Date 5.10.15

Democratic Primary for State Treasurer

S22 E18 Length 28:01 Premiere Date 4.12.15

Republican Primary for State Treasurer

S22 E16 Length 28:01 Premiere Date 3.29.15

2015 Kentucky Elections

S22 E15 Length 56:33 Premiere Date 3.22.15

General Assembly Breakdown

S22 E14 Length 56:33 Premiere Date 3.15.15

2015 Ky General Assembly

S22 E13 Length 56:46 Premiere Date 2.23.15

Telephone Deregulation

S22 E11 Length 56:33 Premiere Date 2.9.15

Local Option Sales Tax

S22 E10 Length 56:33 Premiere Date 2.2.15

2015 Kentucky General Assembly

S22 E7 Length 56:48 Premiere Date 1.5.15

2015 General Assembly

S22 E6 Length 56:33 Premiere Date 12.15.14

Executive Order on Immigration

S22 E4 Length 56:33 Premiere Date 11.24.14

About

Kentucky Tonight, hosted by Renee Shaw, is a public affairs discussion program broadcasted live on Monday nights at 8/7c on KET and KET.org/live.

Viewers with questions and comments may send e-mail to kytonight@ket.org or use the message form on this page. All messages should include first and last name and town or county. The phone number for viewer calls during the program is 1-800-494-7605.

After broadcast, Kentucky Tonight programs are available on KET.org and via podcast (iTunes or Android). Files are normally accessible within 24 hours after the television broadcast.

Kentucky Tonightwas awarded a 1997 regional Emmy by the Ohio Valley Chapter of the National Academy of Television Arts and Sciences. The series was also honored with a 1995 regional Emmy nomination.

To purchase a DVD:

Call 1-800-945-9167 or e-mail shop@ket.org.

Contact

Explore KET