AN ACT relating to funding school districts that have a high percentage of tax-exempt property.
Summary
HB 560 would require the Finance and Administration Cabinet, within available appropriations, to contract with certain local boards of education for payments tied to lost property tax revenue. The bill applies to school districts where at least 65% of the assessed value of real property is exempt from property taxation and where no other financial relief is already provided to offset that loss. For those districts, the state would make a payment intended to recoup at least 25% of the annual property tax revenue lost because of tax-exempt property.
The bill also retains existing language in KRS 45.021 concerning state payments to the City of Frankfort for municipal services provided to state agencies located at the seat of government. In practical terms, HB 560 would create a state funding mechanism for heavily tax-exempt school districts, likely benefiting districts with large amounts of government, nonprofit, or otherwise exempt property that reduce the local tax base.
Impact
HB 560 would amend KRS 45.021 to add a new category of state contracts and payments for qualifying school districts, creating a statutory obligation for the Finance and Administration Cabinet to provide partial reimbursement for lost property tax revenue. The measure would not fully replace local tax losses, but it would establish a floor of at least 25% recoupment for eligible districts, subject to appropriations and only where no other relief is available. The bill could affect school finance, local property tax administration, and state budget planning, while leaving the existing Frankfort municipal services provision intact.
Sentiment
Based on the bill text and available legislative history, the measure appears to be framed as a targeted fiscal relief bill rather than a controversial policy change. No committee transcript or recorded vote information is available in the provided materials, so there is no documented debate or formal opposition to assess. The overall tone of the bill is administrative and supportive of school districts facing unusually large property tax exemptions.
Contention
The main potential point of contention is fiscal: the bill requires state payments only within budgetary limits and appropriations, so lawmakers may question the cost to the General Fund and whether the state should subsidize local districts with large tax-exempt property bases. Another possible issue is eligibility, since the bill uses a 65% threshold and excludes districts already receiving other relief, which could raise questions about which districts qualify and whether the 25% reimbursement level is sufficient. No specific objections or sponsors’ arguments are included in the provided record.