Business
10:17 am
Tue January 15, 2013

Kentucky AG: Constitutional Amendment Needed to Enact Local Option Sales Tax

The mayors of Lexington and Louisville believe Kentucky needs a local option sales tax to stay competitive. The tax is levied temporarily to finance public infrastructure projects, but an opinion issued this week by the Kentucky Attorney General’s Office says voters would first need to approve a constitutional amendment. 

According to the opinion, local governments nor the General Assembly may enact a local option sales tax without changing the state constitution. The Courier-Journal reports the opinion was requested by the Louisville Metro Council. Louisville Mayor Greg Fischer and Lexington Mayor Jim Gray want counties to be able to locally increase the statewide sales tax and use the additional revenue for public projects.  Voters would have to approve the tax and the projects it would fund in a local referendum.

In an opinion issued Monday by Attorney General Jack Conway, the first step would be amending the state constitution.

“If a local government is to levy a tax, it must be either a license tax or an ad valorem tax and may not be an excise tax,” Conway wrote. “A local-option sales tax is an excise tax.”

Lexington Senator Kathy Stein is sponsoring a bill in the General Assembly to allow the local option sales tax amendment. If approved by the legislature, the amendment would also need approval from voters in the November 2014 election.