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Fayette County Schools Propose Occupational Tax Increase

Fayette County Public Schools board meeting discussing budget matters

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News Summary

The Fayette County Public Schools board is set to discuss a proposed increase to the occupational license tax rate from 0.5% to 0.75% during their monthly meeting. This increase comes amid a $16 million budget shortfall in the district and aims to address rising costs and fund necessary classroom expansions. While the superintendent assures financial responsibility, community members express concerns over the proposal’s timing and transparency.

Fayette County, Kentucky – The Fayette County Public Schools (FCPS) board plans to discuss a proposed increase to the occupational license tax rate during its regular monthly meeting scheduled for Tuesday. The resolution aims to raise the tax rate from 0.5% to 0.75% of wages and net profits earned by businesses operating in the county.

Fayette Deputy Superintendent Houston Barber will present this proposal at the meeting. The current occupational license tax is projected to generate approximately $57 million for the district in the upcoming fiscal year. However, FCPS is grappling with a significant budget shortfall of $16 million in its general fund, prompting the need for discussions centered around increasing revenue and reducing expenditures to manage a proposed fiscal budget of $848 million for the year 2026.

In light of rising costs, the FCPS board implemented a 20% reduction in department budgets earlier in May. The proposed resolution highlights that existing revenue sources are inadequate to meet the demand for building sufficient classrooms and providing necessary services for the thousands of students enrolled in Fayette County schools.

The current occupational license tax operates on the salaries, wages, commissions, and other compensations earned by individuals within the county, in addition to the net profits of businesses located there. Notably, this potential tax increase marks a departure from the school board’s typical reliance on property taxes for funding.

The fiscal oversight of the occupational tax lies with the Fayette County fiscal court under a law established in 1974, providing a framework for governance over the tax. While the school board maintains the ability to raise property tax rates for additional revenue, they are limited to a 4% increase before triggering a recall process.

Fayette County has historically benefited from growing property assessments, enabling it to generate more revenue without necessitating an increase in tax rates. The tax collection office of FCPS is responsible for implementing and collecting the occupational tax. It is important to note that non-residents of Fayette County are exempt from this tax.

Fayette County Judge Executive Mary Diane Hanna indicated that the FCPS board’s request for a potential increase could lead to a rise of up to 0.25%. However, some community members express concerns regarding the timing and transparency of the proposal. Former school board chair Stephanie Spires has critiqued the short notice of the proposal and has called for greater community engagement and discussion about the implications of such a tax increase.

Spires has raised alarm over the financial management of previous budgets and has suggested postponing the resolution until more community input can be gathered. Despite these concerns, Superintendent Barber reassured stakeholders about the financial health of FCPS, comparing the situation to household budget adjustments due to inflation and rising costs. He affirmed that their current budget is balanced and managed with responsibility.

The outcome of Tuesday’s meeting could significantly impact the district’s financial landscape and its ability to sustain quality education for students in Fayette County. As discussions unfold, community members are encouraged to stay informed and engaged in the budgetary decisions that affect their schools.