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Bill Summary · HB 405

Overview

HB 405 (2026 Regular Session, Kentucky) addresses how local boards of education levy occupational license fees and how school taxes may be proposed, increased, or implemented in counties with large populations. The bill imposes new procedural requirements and expands, in certain counties, the ability for fiscal courts to approve modest increases in the school tax rate. It also tightens recall and public-notice processes related to license fees.

Main purpose and intent

  • To regulate the process by which local boards of education impose or increase occupational license fees and to require transparent notice before any school tax levy or increase.
  • To authorize, in counties with populations of 300,000 or more, an incremental increase in the school tax rate above the existing cap, subject to fiscal court approval.
  • To align recall and protest procedures for proposed license taxes with the amended framework.

Key provisions and changes

Section 1 (KRS 160.603) — Public notice and compliance before levies
- Local boards of education must comply with the new provisions before levying or increasing school taxes (except certain taxes under existing exceptions) or before increasing the school tax rate.
- Proposes that a favorable vote by the local board is required to levy or increase taxes, with prior publication of meeting details on the board’s website for at least two consecutive weeks.
- Requires public notice of proposed levy or rate increase via the school district’s website and in a newspaper of general circulation or courthouse posting if no newspaper exists.
- Notice must include: current rate and revenue, proposed rate and expected revenue, need and planned use of funds, details for the public hearing, and a statement of the General Assembly’s publication requirement.
- Public hearing must be held not less than one week and not more than two weeks after advertisement.
- If multiple districts in a combined taxing district desire the same levy, joint advertisement and hearing are required.

Section 2 (KRS 160.607) — Tax rate increases in large counties
- The school tax rate is capped at 0.5% uniform rate (subject to change per statute).
- After complying with Section 1 and receiving a favorable fiscal court vote, counties with 300,000+ residents may increase the rate by up to 0.25% (total up to 0.75%).

Section 3 (KRS 160.484) — License fees (county fiscal court role)
- Fiscal courts decide whether to impose license fees at up to 0.5% (subject to board-certified requests).
- If boards representing 90% of county population certify identical rates, the fiscal court must impose that rate.
- Once imposed, the rate remains in effect until reductions are certified by boards; the court may require annual certifications.
- If 90% certification seeks a higher rate than current, the higher rate takes effect, and other rates are rescinded.
- If a proposed rate increase is not approved by the boards, the higher rate does not take effect, and existing rates remain.

Section 4 (KRS 160.485) — Recall and protest procedures
- Imposition of license fees requires a court order or resolution, with a 45-day effective period.
- Establishes petition procedures for recall and protest, including signature requirements (at least 10% of last presidential election votes) and timelines.
- Petitions can suspend the order during consideration.
- If petition sufficiency is confirmed, the question is placed on a county election ballot for voter decision.

Who would be affected

  • County fiscal courts (including Louisville Metro as a merged government and Fayette County in practice) and boards of education in Kentucky counties with large populations.
  • School districts seeking to levy occupational license fees or adjust school tax rates.
  • Voters in affected counties, who would decide via public hearings and, if petitioned, via ballot measures.

Procedural and timeline aspects

  • Public notice and hearings must occur before levies or increases.
  • Voter-approved increases are possible in large counties (≥300,000) with a favorable fiscal court vote.
  • License-fee changes require a 45-day window before taking effect, with potential recall petitions within that period.
  • Joint advertisements/hearings are required for combined districts.

Estimated fiscal impact

  • Local fiscal impact is indeterminable but anticipated to be minimal in administrative terms.
  • Costs related to public notices, potential recall elections, and ballot changes are possible but generally modest.

Compiled from official sources — confirm details with the bill’s official record.

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