FCPS pauses occupational tax increase, creates community budget workgroup

After an official opinion from Kentucky Attorney General (AG) Russell Coleman stating that Fayette County Public School’s Occupational License Tax (OLT) increase was unlawful because they did not meet state-mandated public notice requirements was published last week, the FCPS Board of Education has decided not to move forward with increasing the tax. The Board will instead develop a workgroup made up of community stakeholders who will learn more about FCPS’s budget and examine ways that FCPS can increase revenue and financial stability for the school district.

Two weeks ago, the Fayette County Public Schools (FCPS) Board of Education voted to request an increase in its Occupational License Tax (OLT) from 0.5% to 0.75%.

• FCPS estimated that the tax would bring in an additional $27-$32 million during a full Fiscal Year. This would have filled a projected $16 million deficit in the FY26 budget and would have provided double that amount in upcoming Fiscal Years.
• Now that FCPS has decided not proceed with increasing the tax, there is no current plan for how to fill the $16 million deficit — the workgroup being created by the Board of Education will be tasked with finding a solution.

FCPS had announced last Thursday that the Board planned to hold another vote to increase the OLT on June 23rd. But on Monday, June 9th, they announced their plan to set the tax increase aside and form a workgroup, instead. The workgroup will begin meeting sometime this summer.

What did the Attorney General’s opinion say about the tax increase?

In last week’s story, we cited several questions that this vote had raised amongst the public, including legal concerns related to public notice requirements. Here’s what we said:

• Public Notice Legal Concerns: Kentucky law typically requires specific public notice and hearings for school tax increases. Since this OLT increase can only be adopted by the Fiscal Court, there is some ambiguity around whether the hearing requirement still applies.

This ambiguity has since been somewhat cleared up by AG Russell Coleman’s opinion. While Attorney General opinions while Attorney General opinions aren’t considered law, public officials are expected to follow them unless a court rules otherwise.

• The opinion was requested by State Senator Amanda Bledsoe.
• Fayette County Attorney Angela Evans agreed, and will advise the Fayette County Fiscal Court to follow Coleman’s opinion.
• Both Bledsoe and Evans are former LFUCG Councilmembers.

What notice requirement was missed?

State law says that the public must be notified via newspaper of any tax increase levied by a Kentucky school board 7-14 days before the vote.

• FCPS argued that they did not have to meet this requirement because the Fiscal Court would ultimately be the entity imposing the tax.
• AG Coleman’s opinion disagreed, stating that under Kentucky law, both the FCPS Board of Education and Fiscal Court would be imposing this tax, so both must comply with procedural requirements, including public notice.

The opinion also clarified that the Fiscal Court’s role is ministerial — meaning that if the School Board lawfully requests the tax increase, the Fiscal Court must approve it.

• AG Coleman cites this as further evidence that the decision-making authority lies with the School Board, making it subject to the public notice requirement.
• This also clears up the role of the Fiscal Court moving forward — if the FCPS Board of Education legally sends them this tax rate increase request, they must approve it.

After the AG’s opinion was released, FCPS Superintendent Demetrus Liggins said that FCPS “respectfully but strongly disagrees” with the opinion.

• He said that while FCPS’s legal representation believes there is more room for interpretation in the state statues, FCPS will abide by the “spirit of the opinion.”
• If the School Board decides to vote on a tax increase in the future, they will have to provide adequate public notice as well as a public hearing before a vote occurs.

We wrote in detail last week about how this tax increase works — including how the OLT is structured and who pays it. While FCPS has decided not to pursue this tax increase for now, our earlier post still provides some helpful context.