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KACo Board of Directors votes to support HB 596

Bill filed following several meetings of annexation task force during legislative interim session.

Members of the Kentucky Association of Counties (KACo) Board of Directors voted Friday to express unanimous support for HB 596, an annexation bill filed this week by Rep. Jonathan Dixon.

“This compromise legislation is fair. It’s a good first step,” said KACo Government Affairs Director Shellie Hampton.

HB 596 would mostly apply to counties with a population of 30,000 or more that are currently required to credit the city occupational tax rate against the county’s rate. With some exceptions, counties subject to the crediting requirement currently lose their occupational tax revenue when a city annexes property. 

If passed, HB 596 would require cities in counties of 30,000 or more, where crediting is required, to notify county fiscal courts in writing of proposed annexations. All counties would receive notice of proposed non-consensual annexations.

For annexed property that is already used for residential, commercial or industrial purposes, cities would be required to remit 150% of a county’s net lost tax revenue to the fiscal court for a period of ten years.

For annexation of property that is not currently used for residential, commercial or industrial purposes, HB 596 provides a framework by which counties and cities could develop an interlocal agreement or otherwise evenly split costs and tax revenue associated with the property. 

Additional provisions of the bill include protection of current interlocal agreements, strengthening property owners’ right to object to annexation and the ability to create county development districts of up to 1,000 acres outside the corporate city limits, which would be shielded from city annexation.

HB 596 follows an annexation task force chaired by Rep. Dixon and Sen. Robby Mills that met throughout the legislative interim. The task force heard testimony from KACo, the Kentucky League of Cities (KLC), county officials and mayors about various perspectives on the effects decades-old annexation laws have had on expanding city boundaries and lost county revenue.

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