Action Alert - Anti-Home Rule Bill to be Heard in Senate
Senate Bill 130, sponsored by Senator Chris Girdler (R-Somerset)
CALL TO ACTION: KLC's Board of Directors opposes SB 130.
Call your state senator (especially if they are members of the Senate State and Local Government Committee) at 502-564-8100 or leave a message for your state senator at 1-800-372-7181 to express your opposition. Ask your state senator to oppose SB 130 as it imposes limitations on home rule and likely captures many activities by local governments through the breadth of its definitions. The additional costs associated with the study, publications and tax payments on many of these services imposes an additional financial burden on cities.
SB 130 attempts to impose conditions on the ability local governments, and their agencies, have to initiate or continue in the retail or wholesale sale of commercial products or provide commercial services to their constituents. The definition of "commercial product" includes any product of a type customarily used by the general public for purposes other than governmental purposes that has been historically sold, leased, licensed or offered for such by retail establishments. Commercial service is defined to mean any service offered and sold competitively in substantial quantities in the commercial marketplace under commercial terms and conditions. Both of these definitions exclude those products and services specifically authorized pursuant to state law and those services and products generating gross revenues of no more than $5000 annually.
Before starting or continuing the wholesale or retail sale of commercial services or products, local governments, or their agencies, would be required to conduct a study to determine the effects that the activity will have on the local government, its citizens and the entities already providing the product or service in the jurisdiction of the local government. The legislation requires the study to include an analysis in the study that identifies the product or service, the potential customer base, the pricing, competitors in the marketplace, and a plan for selling the commercial products or services, including the infrastructure, equipment and personnel to be used.
After completion of the study, it shall be made available for public inspection on or before they publish a newspaper advertisement of a public hearing on the study at least 4 but no more than 12 weeks prior to the hearing. The advertisement must include a statement of what the local government plans to sell, the reasons for entry into the activity, a statement that the study was performed, and the details regarding the public hearing where public comment will be taken. Only after the hearing, would the local government be authorized to initiate or continue the sale of the commercial service or product.
Additionally, the bill imposes requirements on any local government that continues or begins to sell a product or service not previously sold by the local government prior to January 1, 2013. The following conditions apply to these activities:
Provide separate accounting and a separate account for the revenues derived from the sale.
Prohibits the subsidization of the product or service with funds from other governmental sources.
Prohibits pricing below the cost of providing the product or service.
Requires the local government to impute the equivalent cost of capital for a private competitor and an amount equal to all taxes, licenses, fees and other assessments that a private competitor would pay in determining the costs of the product or service.
In determining tax liability, the government shall be treated as an independent C corporation.
Require the local government to remit all taxes and licenses, fees and other assessments that would be paid by an independent C corporation to the local government's general fund.
To make payment in lieu of taxes to the county if the local government is not a county, to the state and to any other taxing jurisdiction for property taxes and other applicable taxes.
Requires the preparation and publication in accordance with KRS Chapter 424 a statement of resource allocation that shows the individual products, materials, infrastructure, personnel, utilities, and other resources that are shared by both the local government and the venture. The statement is required to show the monetary value of the individual shared resources used by the venture in proportion to its use by the venture.
The legislation would permit the requirements to be suspended in the event of gubernatorial declaration of a state of emergency or a declaration of a state of emergency under KRS Chapter 39A for a maximum period not to exceed 180 days or until the declaration of emergency is concluded, whichever is earlier.
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