Legislation that would block increasing local occupational taxes by school boards without a vote of the people in most Kentucky counties has advanced after receiving approval by the Senate on Friday.

Senate Bill 76, sponsored by Sen. Amanda Mays Bledsoe, R-Lexington, was filed in response to what she termed widespread public frustration following last year’s procedurally flawed attempt by the Fayette County Board of Education to impose a new school board occupational license tax increase.

SB 76 would raise the population threshold required for a county to gain authority to increase a school board occupational license tax from 300,000 to 500,000 residents, which would limit it to Jefferson County. That means Fayette and other smaller counties would no longer be able to revisit or implement such an increase unless they eventually reach the higher population requirement.

“This proposal offers stability and confidence for employees and employers and gives the school board and administration space to rebuild trust with the community,” Bledsoe said. “I’m encouraged to see the Senate pass SB 76 to the House early in the session, which signals we are serious about this issue and other education-related matters. I encourage the House to move this measure forward and send it to the Governor’s desk.”

SB 76 does not remove or alter any existing occupational license taxes. Instead, it prevents future expansion of the tax in growing counties that have not reached the higher population threshold.

For four decades, the structure of Fayette County’s occupational license tax has remained largely unchanged. The school board’s 0.5 percent occupational license tax was adopted in 1985 and has stayed at that level ever since. Likewise, the City of Lexington last adjusted its occupational license tax in 1992, increasing the rate from 2.0 to 2.25 percent, and it has remained at that rate for more than 30 years.

Bledsoe argues this long-standing stability reflects an understanding that changes to local taxes carry real consequences and require transparency, public trust, and meaningful community buy-in. As a former Lexington City Council member and current Senate budget vice chair, she said last year’s attempt to alter that balance without clear notice or engagement understandably left many Fayette County residents feeling blindsided and frustrated.

The vote was 28-6, so the bill now heads to the House for their consideration.

 

State Sen. Amanda Bledsoe that would block increasing local occupational taxes by school boards without a vote of the people in most Kentucky counties has advanced through the Senate. (LRC photo) Hargis David Michael