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State Legislators Return to Frankfort for 30-Day Regular Session
On Tuesday, January 7, 2025, state legislators return to Frankfort to kick-off the “short” 30-day Regular Session of the Kentucky General Assembly. In contrast to the 60-day Session, the shorter Session focuses on the legislature’s priorities outside of the biennial budgetary process. Special taskforces have met over the legislative Interim related to housing affordability, workforce attraction and retention, artificial intelligence, and school governance in the Commonwealth. Legislation is anticipated from those working group meetings.
POLICY PRIORITIES:
Given the shorter Legislative Session, Commerce Lexington will prioritize advancing key policy initiatives that enjoy broad support from the business community and align with the General Assembly's goals. As policymakers work to enhance the business climate and attract more jobs to the Commonwealth, addressing talent acquisition and increasing labor force participation will be crucial. With the potential influx of workers, the demand for housing will also increase. As these factors evolve within Kentucky’s economy, Commerce Lexington will collaborate closely with key members, stakeholders, and policymakers to achieve the best outcomes for Greater Lexington.
Key issues Commerce Lexington and regional leaders will be advocating for to support the Regional Competitiveness Strategy include:
State Tax Reform: Commerce Lexington has been supportive of the General Assembly’s efforts to modernize the state’s tax code by creating a process to lower the individual income tax over time by expanding the sales tax base. These changes have helped move Kentucky from #36 in 2018 to #22 in 2025 in the Tax Foundation’s state tax competitiveness index rankings. This Session, we anticipate a decrease in the individual income tax rate from 4.0 to 3.5% due to the state’s Budget Reserve Trust Fund meeting the necessary triggers to lower the rate. We will continue to encourage lawmakers to monitor the impact of tax reform and avoid adding any new taxes on business inputs that negatively impact competitiveness for jobs in key sectors and make Kentucky an economic outlier.
Housing Affordability: Rapidly rising home prices combined with low inventory in Fayette County and the region are pricing families, essential workers, and first-time homebuyers out of the market. Providing adequate levels of housing to meet the needs of the region’s workforce is an issue of concern for expanding and relocating companies and the attraction of young professionals. To attract the talent needed to support a diverse and growing economy, government leaders must plan for continued growth and development, seek innovative policy solutions to the housing issue in collaboration with community stakeholders and evaluate the impact each policy decision on our ability to develop and maintain housing options within the reach of all our citizens. Commerce Lexington supports efforts to increase the availability and affordability of housing in Lexington and the region and create housing opportunities in all price ranges for all citizens.
At the state level, Commerce Lexington will support efforts to increase funding for housing affordability projects for Lexington and the region, including advocacy that duplicates Lexington’s Transformational Housing Affordability Project model throughout the Commonwealth. This model encourages collaboration between banks, housing developers, and state and local policymakers to strategically address the housing shortage for Kentucky’s growing workforce. Proposed solutions include encouraging capital revolving loan partnerships, creating a workforce housing infrastructure loan fund to support developers, implementing a Kentucky workforce affordable housing and multi-housing tax credit to provide builders and developers with additional resources. We also support the General Assembly allocating additional funding to support affordable housing projects aimed at meeting the missing middle or workforce housing needs.
Talent Attraction & Retention Marketing: With an estimated 7.4 million open jobs across the United States and 7 million actively unemployed workers, attracting talent remains a significant hurdle for the national economy. Matching labor to workforce shortages is not uniquely a national problem, Kentucky faces the same challenge. As of September 2024, Kentucky had 133,000 job openings, with an unemployment rate of 4.9% totaling 101,511 unemployed workers. States are continuing to compete to attract skilled workers needed to meet industry needs. Through intentionally focused marketing efforts, states are profiling live and work strengths to targeted audiences as part of workforce attraction strategies.
Through the Regional Competitiveness Strategy, regional leaders are working to attract and retain 1,500 more young professionals each year by elevating marketing to targeted cities and increasing job connections for students. Many states are making investments in talent attraction marketing efforts to amplify messaging about quality of life and job opportunities.
During the 2024 Legislative Session, the Kentucky General Assembly appropriated funding for a Kentucky Talent Attraction Initiative via House Bill 263. The legislation allocated $250,000 to the Legislative Research Commission in fiscal year 2024-2025 for consulting, strategic support, and to convene a working group to identify a Kentucky specific talent attraction marketing strategy. However, additional statutory clarification is needed to determine the exact appropriation of the $250,000 to implement a state strategy. Commerce Lexington supports the General Assembly providing specific statutory guidance that strictly directs the Kentucky Cabinet for Economic Development to hire a consultant, convene a working group, and identify a Kentucky specific talent attraction marketing strategy. Once a strategy is established, Commerce Lexington supports investing in funding for a talent attraction marketing state strategy and grant program to help support regional economic development.
Business Climate: The General Assembly has continued to improve Kentucky’s business climate in the past few years. In addition to lowering the state’s individual income tax rate, other policies like lowering the corporate income tax rate, reforming the Commonwealth’s unemployment insurance system, funding Kentucky’s public pension system beyond the statutorily required thresholds for multiple years and avoiding additional sales taxes on business services has improved Kentucky’s overall tax competitiveness rating. Continued business friendly policies will further elevate Kentucky’s position to attract more business development and workforce attraction.
Kentucky Product Development Initiative: In 2022, the Kentucky General Assembly invested $100 million in the Kentucky Product Development Initiative (KPDI) to help accelerate the development of more land and buildings for jobs across the state. During the 2024 Legislative Session the General Assembly continued funding KPDI with an additional $70 million over the next biennium, demonstrating policymakers’ ongoing investments in Kentucky economic development initiatives. For our region, KPDI funding is supporting 9 job site projects and $30M in local and state investment. One of the competitive disadvantages for the Greater Lexington region is the lack of shovel ready land for jobs, and the development of a 500–1000-acre mega site. Commerce Lexington and regional leaders will ask legislators to continue to invest in the KPDI program and consider flexibility in eligible projects to include regional economic development marketing.
Infrastructure: As Lexington and the Greater LEX region continue to grow, transportation, housing, and economic infrastructure projects will be critical to strategic economic development and quality of life standards. Elevating key infrastructure projects to the General Assembly will be a top priority for Commerce Lexington and local government stakeholders.
The 2025 Session will conclude Friday, March 28th. Commerce Lexington urges members to stay connected on state, local and federal policy issues during the year. Regular email updates will be provided to members throughout the year to keep business updated on what’s happening in City Hall, Frankfort and Washington, D.C. and the impact on the Greater LEX region.
If you have questions, need assistance with a policy issue, or would like to get involved with advocacy efforts, contact Andi Johnson, Chief Policy Officer and Director of Regional Engagement, at [email protected] or P. Anthony Allen, Vice President, Public Policy at [email protected].
On Tuesday, January 7, 2025, state legislators return to Frankfort to kick-off the “short” 30-day Regular Session of the Kentucky General Assembly. In contrast to the 60-day Session, the shorter Session focuses on the legislature’s priorities outside of the biennial budgetary process. Special taskforces have met over the legislative Interim related to housing affordability, workforce attraction and retention, artificial intelligence, and school governance in the Commonwealth. Legislation is anticipated from those working group meetings.
POLICY PRIORITIES:
Given the shorter Legislative Session, Commerce Lexington will prioritize advancing key policy initiatives that enjoy broad support from the business community and align with the General Assembly's goals. As policymakers work to enhance the business climate and attract more jobs to the Commonwealth, addressing talent acquisition and increasing labor force participation will be crucial. With the potential influx of workers, the demand for housing will also increase. As these factors evolve within Kentucky’s economy, Commerce Lexington will collaborate closely with key members, stakeholders, and policymakers to achieve the best outcomes for Greater Lexington.
Key issues Commerce Lexington and regional leaders will be advocating for to support the Regional Competitiveness Strategy include:
State Tax Reform: Commerce Lexington has been supportive of the General Assembly’s efforts to modernize the state’s tax code by creating a process to lower the individual income tax over time by expanding the sales tax base. These changes have helped move Kentucky from #36 in 2018 to #22 in 2025 in the Tax Foundation’s state tax competitiveness index rankings. This Session, we anticipate a decrease in the individual income tax rate from 4.0 to 3.5% due to the state’s Budget Reserve Trust Fund meeting the necessary triggers to lower the rate. We will continue to encourage lawmakers to monitor the impact of tax reform and avoid adding any new taxes on business inputs that negatively impact competitiveness for jobs in key sectors and make Kentucky an economic outlier.
Housing Affordability: Rapidly rising home prices combined with low inventory in Fayette County and the region are pricing families, essential workers, and first-time homebuyers out of the market. Providing adequate levels of housing to meet the needs of the region’s workforce is an issue of concern for expanding and relocating companies and the attraction of young professionals. To attract the talent needed to support a diverse and growing economy, government leaders must plan for continued growth and development, seek innovative policy solutions to the housing issue in collaboration with community stakeholders and evaluate the impact each policy decision on our ability to develop and maintain housing options within the reach of all our citizens. Commerce Lexington supports efforts to increase the availability and affordability of housing in Lexington and the region and create housing opportunities in all price ranges for all citizens.
At the state level, Commerce Lexington will support efforts to increase funding for housing affordability projects for Lexington and the region, including advocacy that duplicates Lexington’s Transformational Housing Affordability Project model throughout the Commonwealth. This model encourages collaboration between banks, housing developers, and state and local policymakers to strategically address the housing shortage for Kentucky’s growing workforce. Proposed solutions include encouraging capital revolving loan partnerships, creating a workforce housing infrastructure loan fund to support developers, implementing a Kentucky workforce affordable housing and multi-housing tax credit to provide builders and developers with additional resources. We also support the General Assembly allocating additional funding to support affordable housing projects aimed at meeting the missing middle or workforce housing needs.
Talent Attraction & Retention Marketing: With an estimated 7.4 million open jobs across the United States and 7 million actively unemployed workers, attracting talent remains a significant hurdle for the national economy. Matching labor to workforce shortages is not uniquely a national problem, Kentucky faces the same challenge. As of September 2024, Kentucky had 133,000 job openings, with an unemployment rate of 4.9% totaling 101,511 unemployed workers. States are continuing to compete to attract skilled workers needed to meet industry needs. Through intentionally focused marketing efforts, states are profiling live and work strengths to targeted audiences as part of workforce attraction strategies.
Through the Regional Competitiveness Strategy, regional leaders are working to attract and retain 1,500 more young professionals each year by elevating marketing to targeted cities and increasing job connections for students. Many states are making investments in talent attraction marketing efforts to amplify messaging about quality of life and job opportunities.
During the 2024 Legislative Session, the Kentucky General Assembly appropriated funding for a Kentucky Talent Attraction Initiative via House Bill 263. The legislation allocated $250,000 to the Legislative Research Commission in fiscal year 2024-2025 for consulting, strategic support, and to convene a working group to identify a Kentucky specific talent attraction marketing strategy. However, additional statutory clarification is needed to determine the exact appropriation of the $250,000 to implement a state strategy. Commerce Lexington supports the General Assembly providing specific statutory guidance that strictly directs the Kentucky Cabinet for Economic Development to hire a consultant, convene a working group, and identify a Kentucky specific talent attraction marketing strategy. Once a strategy is established, Commerce Lexington supports investing in funding for a talent attraction marketing state strategy and grant program to help support regional economic development.
Business Climate: The General Assembly has continued to improve Kentucky’s business climate in the past few years. In addition to lowering the state’s individual income tax rate, other policies like lowering the corporate income tax rate, reforming the Commonwealth’s unemployment insurance system, funding Kentucky’s public pension system beyond the statutorily required thresholds for multiple years and avoiding additional sales taxes on business services has improved Kentucky’s overall tax competitiveness rating. Continued business friendly policies will further elevate Kentucky’s position to attract more business development and workforce attraction.
Kentucky Product Development Initiative: In 2022, the Kentucky General Assembly invested $100 million in the Kentucky Product Development Initiative (KPDI) to help accelerate the development of more land and buildings for jobs across the state. During the 2024 Legislative Session the General Assembly continued funding KPDI with an additional $70 million over the next biennium, demonstrating policymakers’ ongoing investments in Kentucky economic development initiatives. For our region, KPDI funding is supporting 9 job site projects and $30M in local and state investment. One of the competitive disadvantages for the Greater Lexington region is the lack of shovel ready land for jobs, and the development of a 500–1000-acre mega site. Commerce Lexington and regional leaders will ask legislators to continue to invest in the KPDI program and consider flexibility in eligible projects to include regional economic development marketing.
Infrastructure: As Lexington and the Greater LEX region continue to grow, transportation, housing, and economic infrastructure projects will be critical to strategic economic development and quality of life standards. Elevating key infrastructure projects to the General Assembly will be a top priority for Commerce Lexington and local government stakeholders.
The 2025 Session will conclude Friday, March 28th. Commerce Lexington urges members to stay connected on state, local and federal policy issues during the year. Regular email updates will be provided to members throughout the year to keep business updated on what’s happening in City Hall, Frankfort and Washington, D.C. and the impact on the Greater LEX region.
If you have questions, need assistance with a policy issue, or would like to get involved with advocacy efforts, contact Andi Johnson, Chief Policy Officer and Director of Regional Engagement, at [email protected] or P. Anthony Allen, Vice President, Public Policy at [email protected].