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Fayette County Proposes Occupational License Tax Increase for Schools

Community members at a meeting discussing the Occupational License Tax increase for Fayette County Schools.

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News Summary

The Fayette County Board of Education is set to propose an increase in the Occupational License Tax for Schools from 0.5% to 0.75% amid a significant budget shortfall. This tax hike, aimed at addressing reported budget cuts and rising costs, will be presented by Deputy Superintendent Houston Barber during the upcoming school board meeting. The proposal, if approved, is expected to generate approximately $57 million in the next fiscal year, while community engagement remains a key component in the decision-making process.

Fayette County – The Fayette County Board of Education is set to propose an increase in the Occupational License Tax for Schools (OLTS), elevating the rate from 0.5% to 0.75% of salaries, wages, commissions, and other work compensations. This increase is a response to a significant budget shortfall that has left the district struggling to meet the financial needs of its schools.

The resolution for the tax increase will be presented by Fayette Deputy Superintendent Houston Barber during the school board’s regular monthly meeting, scheduled for 6:00 PM at the John D. Price Administrative Building. The proposed tax hike stems from reported budget cuts of 20% across various departments in the district, alongside an ongoing effort to secure an additional $16 million in budget reductions to balance a projected $848 million budget for fiscal year 2026.

Rising costs related to insurance, utilities, infrastructure, and personnel are putting significant strain on the district’s finances. Meanwhile, the State Education Excellence in Kentucky (SEEK) funding has remained static, and federal funding sources have recently expired, intensifying the need for the proposed tax increase.

If approved by the Fayette County Fiscal Court, the increased OLTS is expected to take effect in January 2026. Currently, the OLTS is projected to generate approximately $57 million for district operations in the upcoming fiscal year. The tax collection process will be managed by the Fayette County Public Schools tax collection office and will not extend to non-residents of Fayette County.

The school board generally funds education primarily through property taxes; thus, the shift towards increasing the occupational tax is being regarded as a non-traditional route to securing essential funding. The school board is limited by Kentucky law to increment property tax rates by no more than 4% without triggering a recall process, creating a reliance on alternative methods to address the budget deficit.

Despite the pressing need for additional revenue, some community members have expressed skepticism about the proposal, citing concerns regarding transparency and the amount of notice provided regarding the tax increase. Previous discussions had raised uncertainties, leaving some feeling blindsided as the board pivots from traditional funding methods.

The school board’s authority to request a specific income tax rate is governed by Kentucky law and managed by the Fayette County Fiscal Court, adding a layer of complexity to the approval process. By proposing to increase the occupational license tax rate by 0.25%, the board is responding to immediate financial constraints while seeking to maintain the quality of education across the district.

Community members are encouraged to participate in the discussion by attending the meeting or reaching out to board members via email to share their views on the impending tax increase. Additional community engagement is vital as the board moves forward with tackling the budget crisis that currently faces Fayette County Public Schools.