Red River Gorge resort tax break survives in bill that also changes KY's tax cut formula

Yahoo

15-03-2025

A significant tax incentive designed to apply to a resort in the Red River Gorge area made it through both chambers of the General Assembly on Friday, paving the way for a long-planned project there to come to fruition.
House Bill 775, sponsored by Jason Nemes, R-Middletown, was expanded greatly this week via a committee substitute to include several revenue-related measures. Revenue bills like this one are often referred to as 'Christmas tree bills' due to the various separate measures representing the 'ornaments' on a tree.
A larger sales tax-based incentive for a potential resort at Red River Gorge — doubling both the timeline and potential percentage of costs recouped — was one of the more notable additions. The incentive is written with specific criteria that match a previously proposed 800-plus acre project located near Slade in Powell County.
Legislative leadership has acknowledged it could apply to that project, which has been promoted by a nonprofit group of local leaders and business executives but received major pushback a few years ago.
Beyond the incentive, the bill also makes significant changes to how the legislature can cut the state's income tax rate.
Currently, the legislature can lower the income tax rate only in 0.5% increments, and only if certain budgetary 'triggers' are activated with the balance of the Budget Reserve Trust Fund and General Fund revenues.
Under the new bill, the legislature could drop the rate by either 0.25% or 0.5%, with the General Fund trigger threshold dropping by 50% for the next two years. After that, the legislature could opt to cut the rate by increments of 0.1% to 0.5% based on how much General Fund revenue is coming in.
Little discussion from lawmakers was had about the Red River Gorge-targeted tax incentive.
However, Andrew McNeill, executive director of the Kentucky Forum for Rights Economics and Education, a free market think tank, had harsh words.
'I'm sure these investors consider themselves capitalists, and if asked will tell you they support free enterprise and free markets,' he said. 'Investors assume risk and therefore should benefit from taking that entrepreneurial step, but time and again we see they want to have the taxpayers support the risk without sharing in the profits of the whole enterprise.
'They're making taxpayers equity partners in this project, but you ask them do the taxpayers get any profit share out of this, the answer is no.'
Sen. Cassie Chambers Armstrong, D-Louisville, said she wished she could vote yes on the bill because she liked many of its provisions. But she worried the ability to more regularly cut the income tax rate, and therefore shrink a state revenue source, wasn't the right move.
'I'll be honest, the previous triggers that were in place made me feel as though… we were (lowering taxes) in a fiscally responsible manner, and I don't see why we need to change that now. I worry about doing that at this moment in time, in particular, given the federal uncertainty and given questions about what's going to happen to our Medicaid program at the federal level,' Armstrong said.
Senate Appropriations & Revenue Chair Chris McDaniel, R–Ryland Heights, said in the long run, the change puts the state on the same path it would have been on otherwise.
'It's just a change in the nature of the increments. You're not necessarily going to be going any faster… You're taking smaller steps, but conceivably more of them. So, I'm really not that worried about the change,' McDaniel said.