Local Option Sales Tax legislation clears first legislative hurdle

House Bill 2, legislation to give local communities the option to place an additional sales tax of up to one percent on the ballot for voter approval, passed the House Committee on Elections, Constitutional Amendments and Intergovernmental Affairs Monday.

The bipartisan legislation filed by House Speaker Greg Stumbo, Republican Leader Jeff Hoover and others would give Kentucky’s communities another tool to fund important projects.

The proposal would allow local governments to use the additional sales tax to pay for voter-approved local investments. When the projects are finished, that increase would sunset.

The legislation will require a two thirds majority in each chamber to get through as it is a constitutional amendment. Local option sales tax legislation, also known as LIFT (Local Investments For Transformation), is backed by the Kentucky Chamber.

In the committee meeting Monday, Stumbo noted the support of many chambers of commerce across the state and noted the success other cities across the country have seen with this type of option in place.

Stumbo also said the proposal should not be viewed as a tax increase since it is put on the ballot as a constitutional amendment for approval before being voted on by citizens of the community to choose whether or not they want to finance a project in this way.

House Bill 2 now goes to the full House for a floor vote.

Learn much more about the issue of local option sales tax including how it works and a list of supporters, visit the LIFT Kentucky website here.