Of the range of issues facing Kentucky’s city and county governments, two have taken center stage among lawmakers in Frankfort: Whether candidates in local races that traditionally have been nonpartisan should now have to disclose their party affiliations, and how to give municipalities more options for generating local revenues.
The taxation issue has percolated around the capitol for years, and will likely be delayed until the 2024 General Assembly session. But the local election issue is poised to move this year.
Companion House and Senate bills would change all of Kentucky’s county commissioner, mayor, city council, school board, and soil and water conservation officer races into partisan contests. Senate Bill 50 sponsor Sen. Damon Thayer (R-Georgetown) says the legislation is designed to make all elections across the commonwealth consistent and to promote accountability.
“I believe voters should have the most amount of information possible when they go in to the polls to cast their vote,” says Thayer. “The number one step we could take to tell people about who they’re voting for is for people to declare their political party when they’re running for a current nonpartisan office.”
Thayer contends voters tend to know little about the candidates for local offices, so they end up voting for a friend or a familiar name, not the best candidate.
Rep. Matt Lockett (R-Nicholasville), the sponsor of House Bill 50, says he’s amazed that anyone would oppose making elections more transparent.
“I believe, and I think most people believe as well, how you identify with your party tells a lot about how you’re going to govern,” says Lockett. “I think the voters should know that.”
Candidates would not be limited to Democratic or Republican affiliations, according to Thayer, but could be listed as Libertarian, Green Party, independents or any other registration.
Critics say affiliations are of limited value in communicating how a candidate would govern on important issues.
“I think it’s flawed when you say that a party initial tells someone what you stand for,” says Sen. Reggie Thomas (D-Lexington). “You can’t pigeonhole all Democrats, all Republicans in one category. It just doesn’t work.”
Only a handful of Kentucky’s 415 city and county governments have partisan races. When Lexington and Fayette County merged in 1974, officials there made the races for mayor and urban-county council nonpartisan. Rep. George Brown, a Democrat, who served on Lexington’s council for 13 years, says he never heard voters question his party affiliation.
“If you can provide or help provide basic services for the citizens, it doesn’t matter whether it’s a D or a R,” says Brown. “My thing is that if it’s not broke, why do we need to fix it?”
The proposal has drawn opposition from the Kentucky League of Cities and variety of elected officials across the commonwealth. Fort Wright Mayor Dave Hatter, a Republican, wrote in a recent editorial that the legislation would result in more political discord as well as limit the pool of candidates and diversity of ideas in local races. He said state statute already allows cities and counties to choose whether to have partisan elections.
Polling indicates that 65 percent of Kentuckians support the idea, according to Thayer. He says most of the opposition he and Lockett have heard on the proposal is from currently serving elected officials. They say candidates shouldn’t be afraid to tell voters what their affiliation is, especially when it comes to city council and school board members who would spend taxpayer dollars.
“If you have authority to raise taxes on voters, then those voters deserve to know everything about you, as an official that will govern, how you might make decisions,” says Lockett.
Another concern with the proposed legislation is that federal government employees would be precluded from running in local elections because the Hatch Act prevents them for participating in partisan political activities. Thomas says that would further limit the pool of available candidates in these races. He also fears the impacts of turning school board races into partisan contests.
“Do we really want to politicize our education? That’s the real danger here,” says Thomas. “I would hate to see our country go in that direction.”
Thayer contends that school boards are already partisan. He also says if potential candidates are concerned about Hatch Act restrictions, then they should reach out to him or Lockett so they can address that issue in their legislation.
The current proposals do not include judicial races. Thayer says he thinks those contests should be partisan as well, but he says that would require an amendment to the state constitution.
Depending on the reception that House and Senate Bills 50 receive in the legislature, Thayer says they could be updated to focus on making only certain races partisan during this General Assembly session. He says lawmakers could revisit the issue in future sessions to include other races.
“We might pass it this session, we might pass part of it this session, we might pass none of it this session,” says Thayer. “But it’s not going away.”
Expanding Revenue Options for Cities and Counties
For some two decades, city and county officials have lobbied state lawmakers for more revenue options to fund infrastructure projects, payroll, and municipal services. That’s because local governments are currently limited by the Kentucky Constitution in what they can tax. They can levy property taxes, which generally go to supporting local public schools and special government entities. They can also collect franchise taxes as well as occupational taxes on businesses and individuals. Some Kentucky cities also have the ability to levy restaurant taxes.
Kentucky League of Cities Executive Director and CEO J.D. Chaney says city governments have “practically capped out” those revenue-generating options.
“The insurance premium tax is just at the point where if you raise it more, it makes it too expensive to buy insurance,” says Chaney. “From an occupational tax standpoint, if you raise that any, then you become less competitive with our neighboring states or your neighboring communities in Kentucky. And from a property tax standpoint, we’re statutorily limited.”
As Frankfort lawmakers have moved to make the state’s tax system more competitive, Rep. Michael Meredith (R-Oakland) says it’s time to do the same for city and county taxes. He says Kentucky is one of only 15 states that limit municipalities to Income-based taxes for generating revenues.
“We are one of the top five or six most-reliant states in the nation on local occupational taxes for the revenue that provide the basic services to cities and counties,” says Meredith. “If we ever want to reduce that, we have to give them another option to replace that revenue.”
In the 2022 General Assembly session, Meredith sponsored House Bill 475, a bipartisan bill that proposed a constitutional amendment to give Kentucky’s cities and counties new taxation options. That measure passed the House 80-17 but then stalled in the Senate.
Instead of reviving that proposal this year, Meredith says they are tweaking the legislation for 2024, when a proposed amendment could go on the ballot. Chaney says the amendment itself will not include any tax policy changes.
“The constitutional provision would not allow cities to do anything, would not allow counties to do anything,” says Chaney. “It would allow General Assembly to decide what we could do.”
Meredith says the idea is to create an environment where cities and counties can transition away from occupational taxes and replace that revenue with new local sales taxes of probably 1 or 1.5 percent. Like the current effort to move state tax policy from income to consumption taxes, Meredith says the local government plan would include a transition period with budget triggers to protect a municipality’s overall revenues without burdening residents with more taxes.
“Our key is this: Protect the baseline revenues that counties and cities have today,” says Meredith, “and then grow the pie so that we, overall, lower the tax burden but allow the city and county revenues to grow.”
The Kentucky Retail Federation is opposed to Meredith’s plan. Shannon Stiglitz, senior vice president of government affairs for the federation, says it could pit neighboring communities against one another. A city or county that opts to not levy local sales taxes would have an economic advantage over those that do implement them.
“Consumer spending is impacted anytime the price of a good increases,” says Stiglitz. “We know consumers shop with their feet. They will go to get a bargain and they will go to pay less.”
Levying new local taxes would create an additional administrative burden on businesses that would have to collect them, according to Stiglitz, and would force business owners to spend more money on the goods and services that they purchase. She also fears that without legislative intervention, businesses would end up being taxed twice at the state and local levels for things like utilities.
"Currently Kentuckians have a constitutional protection to know that the General Assembly cannot overly expand and give local governments the ability to tax lots of different things,” says Stiglitz.
Overtaxing Kentuckians also worries Sen. Thayer. He contends any increase in sales taxes must be offset by a decrease in occupational taxes.
“My main concern are the taxpayers,” says Thayer. “I want to make sure that if a local sales tax is levied that it doesn’t become a burden on the taxpayers in that locality.”
Thayer says Meredith’s proposal has the backing of powerful business groups including the Northern Kentucky Chamber of Commerce, Greater Louisville, Inc., Commerce Lexington, and the state chamber. But he says proponents will have to do a significant marketing campaign to convince reluctant lawmakers to approve the ballot measure, and to convince voters wary of a new tax system to approve the constitutional amendment.
“I don’t think if we put it on the ballot today, it would pass,” says Thayer. “I don’t think there’s enough of an understanding out there in the public about how it would work.”
