As a renewed push is expected next year for a state-run system to collect local occupational taxes, lawmakers are examining how those taxes and fees are handled by cities and counties today.
J.D. Chaney, executive director of the Kentucky League of Cities (KLC), and Shellie Hampton, director of government affairs for the Kentucky Association of Counties (KACo), testified Tuesday before the Interim Joint Committee on Local Government, outlining how Kentucky’s existing system already includes uniform processes, standardized forms and a central online repository for local tax information.
Chaney explained that cities and counties collect occupational license taxes under authority granted by Section 181 of the Kentucky Constitution and related state statutes. Over the past two decades, local governments, tax administrators, and CPAs have worked with the General Assembly to standardize how these taxes are administered. Previous legislation established uniform definitions, forms, filing deadlines, refund procedures, and reporting requirements across all local jurisdictions.
Hampton demonstrated to committee members how businesses can already access local ordinances, tax forms, and contact information through the Secretary of State’s online “One Stop Business Portal.”
During the committee’s September meeting, businesses voiced their support for HB 253, a failed measure from the 2025 legislative session that called for the creation of an alternative web-based occupational license fee system administered by the State Treasurer. Proponents intend to refile a bill during the 2026 session.
Occupational license taxes are a critical revenue source for local governments, accounting for more than 60 percent of total tax revenue for cities and nearly 46 percent for counties.
Committee co-chair Rep. Patrick Flannery said he can understand why the term “centralized collection” can cause concern for local government officials who don’t want local tax revenue being sent through Frankfort first. From the business perspective, he thinks more can be done to streamline the tax collection and reporting process through online payments.
“It’s really more about simplification,” Flannery said. “As we move forward on this whole topic, I’d really like to try to focus more on that.”
Click here to view the presentation slides from KLC and KACo.
