FRANKFORT, Ky. — Kentuckians really care about their bourbon, so much so that Senate President Robert Stivers said someone came to his house late Thursday night with a plan to cut taxes on the industry. 

What You Need To Know

  • Kentucky lawmakers are discussing potential reforms for taxes on the bourbon industry

  • Kentucky is the only state that applies a tax on each barrel a distillery has

  • A task force has been looking into the potential impact repealing or reducing the tax would have on the industry and other taxing bodies

  • Friday’s testimony focused on school districts

“Whoever continues to spread that idea that there is some utopian fix out there, I wish they would stop,” he said. “It allows me to sleep better instead of getting knocks on my door late at night.”

Stivers leads a task force looking at taxes on the barrels of bourbon a distillery has; whether to reduce them, eliminate them, or some other solution.

“The ultimate goal that my co-chair and I have stated is to do something that does not hurt locals, but creates a different economic dynamic to allow job growth and expansion,” he said.

Any tax change could affect the school districts near these distilleries because of how their funding is calculated.

“This is complex and even I myself constantly have to say, ‘Gosh, I have to reread that’ and remind myself how that works,” Eric Kennedy with the Kentucky School Boards Association said.

Kennedy told the task force they need to be careful about changing taxes not only because of funding, but because the taxes are tied into the debt schools get into while financing big projects.  

“It’s like a mortgage: I mean, you can’t go back in time and not issue the bond,” he said. “You’re on the hook for those bond payments.”

The exact impact is hard to figure out since there are multiple options on the table, but it will be a discussion that continues into the next session.

Figures presented to the task force earlier this year showed 28 school districts receive money from the bourbon barrel tax, and if the tax is repealed entirely, they’d see a net loss of about $5.5 million.  

Kentucky is the only state with such a tax.