Leave occupational tax collection to cities
Published 6:00 am Sunday, February 9, 2025
There’s some wisdom on the old saying, if it ain’t broke, don’t fix it.
Such is the case with the process cities use to collect occupational taxes – typically the main source of income for municipalities.
The current process where municipalities are in charge of collecting the taxes, however, faces a new challenge in the form of legislation filed by Rep. Jared Bauman, R-Louisville.
House Bill 253 would give state government the job of collecting and then distributing municipal occupational taxes.
“HB 253 simplifies the tax payment process by creating a single online portal, reducing administrative burdens for businesses of all sizes,” Bauman said in a news release. “By streamlining compliance, the measure not only supports small businesses but also fosters economic development, making it easier for entrepreneurs to focus on growth rather than red tape.”
But many cities question why the state needs to get involved in something they have done for as long as anyone can remember.
Both Bowling Green and Owensboro governments have come out publicly against the bill, as has the Kentucky League of Cities.
“This bill is added governmental bureaucracy and will only complicate the process of collecting occupational taxes, a vital revenue source for cities that funds critical infrastructure as well as emergency services, like police and firefighters,” J.D. Chaney, executive director and CEO of the Kentucky League of Cities, said in a statement. “Cities are the economic engine of Kentucky, and we will do everything we can to protect that engine from unintended consequences of government overreach and expenses, which this bill would create.”
The City of Bowling Green gets more than 70% of its general fund budget from occupational taxes, meaning any snags or delays in the system would have a significant impact.
“I can’t emphasize (enough) how critical this is and how devastating this would be,” Bowling Green City Manager Jeff Meisel said last week. “This house bill … would be devastating.”
Perhaps there are some municipalities that have had issues with collecting occupational taxes; in that case, perhaps a state-run system could be beneficial. But if that were the case, the use of the state system should be at best voluntary.
Leaders in Kentucky’s municipalities are the ones best suited to determine whether they need the state’s help to collect these local taxes.