FRANKFORT, Ky. — Dozens of new state laws are set to take effect on July 14 on issues ranging from age limits for serving alcohol to enhanced penalties for committing crimes during natural disasters. Three key business bills, however, won’t take effect until 2023.
Under the Kentucky Constitution, bills passed by the General Assembly and enacted into law go into effect 90 days after the adjournment of the legislative session. This year, that means July 14. Lawmakers can, and often do, stipulate specific dates for laws to take effect, and sometimes specify that laws are to take effect immediately through “emergency clauses.” Moreover, appropriations bills, like the state budget, generally follow the state’s fiscal year, which begins July 1 of each year and ends the following June 30.
In the 2022 legislative session, lawmakers in Frankfort passed 1,164 bills (not counting resolutions, of which there were 475). This was more bills than in previous sessions. The past three sessions all saw less than 1,000 bills filed. Of the 1,164 bills filed in the 2022 session, lawmakers passed 234, all but four of which were enacted into law. The Legislative Research Commission maintains legislative statistics for sessions.
A variety of bills go into effect on July 14, including bills on topics such as charter schools, lawsuits, the death penalty, substance use disorder, education, pari-mutuel wagering, serving alcohol, and more.
Three bills important to the Kentucky business community will not take effect until 2023 due to the language written into these bills.
Many key provisions in House Bill 8, a major tax reform bill, will not take effect until January 1, 2023. This includes significant changes to the applicability of sales and use tax to new services such as lobbying services, telemarketing services, parking services, and more. A full list of services for which businesses may be required to collect and remit sales and use tax can be found here. The Kentucky Department of Revenue will be producing additional guidance for employers on these aspects of House Bill 8.
Another key element of House Bill 8, on the other hand, goes into effect earlier. In September 2022, the law requires the Department of Revenue to evaluate whether specific fiscal conditions in the state have been met to trigger a reduction to Kentucky’s individual income tax rate. Assuming all conditions have been met, Kentucky’s individual income tax rate will fall from 5 percent to 4.5 percent in January 2023. This process will repeat itself until Kentucky’s individual income tax is fully phased out.
House Bill 4, which reforms Kentucky’s unemployment insurance system, is set to take effect January 1, 2023. This legislation makes several key changes to unemployment insurance in the Commonwealth:
- Instead of allowing claimants to receive half a year of benefits when they go on unemployment, the maximum duration of benefits will be tied to economic conditions.
- Claimants will have access to additional weeks of benefits if they enroll in qualified training and education programs.
- Work search requirements are significantly strengthened, and employers will have the ability to report to the Labor Cabinet when candidates fail to appear for job interviews or refuse offers of employment.
- New employers will receive a UI tax rate based on an experience rating after 12 months instead of three years.
- The state will begin operating a new work-share program, also known as short-term compensation to give employers an alternative to layoffs.
Another bill, House Bill 499, will roll out an innovative new child care program in Kentucky, officially taking effect in stages throughout the first half of 2023. Under this legislation, if an employer partners with a child care provider to help an employee afford child care services, the state may match payments made by the employer on the employee’s behalf. The Employee Child Care Assistance Partnership will officially start in July 2023, but the Cabinet for Health and Family Services will begin accepting applications for employer-provider partnerships in April 2023. The Cabinet and Chamber will be releasing more information on this important new program in the coming months.
Finally, in addition to the three bills mentioned above, one other key piece of legislation has already taken effect and has already helped employers’ bottom lines. House Bill 144 established a freeze to the state’s unemployment insurance tax schedule, saving employers an estimated $128 million in 2022, or roughly $75 per covered employee. In addition, this legislation also appropriated $242 million in federal relief dollars to Kentucky’s UI Trust Fund – which is solely funded by Kentucky employers – to bring the balance back to prepandemic levels.
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