FRANKFORT, Ky. — A House committee signed off on a new tax incentive program aimed at helping small businesses in rural counties. 

What You Need To Know

  • Lawmakers introduced a bill creating a tax incentive program

  • The tax credits would go to large investment firms that finance small businesses in rural Kentucky

  • The fund is worth $125 million and includes $75 million worth of tax credits, which would be capped at $15 million each year

  • House Bill 308 passed out of the House Agriculture Committee on Wednesday and still needs to clear the House Budget Committee before reaching the floor

“This will be another tool in the box for those rural small businesses,” Rep. Myron Dossett (R-Pembroke) said.

House Bill 308 would create a tax incentive program worth $125 million over five years, including $75 million from the state in the form of tax credits. The tax credits cap out at $15 million per year between 2024 and 2029.

Capital investment firms that provide financing to small businesses would be eligible for the incentive based largely on how many jobs are created and retained by the businesses.

“The win-win for me is not only do you retain the jobs, but you grow the jobs, so you have the best of both worlds,” the bill’s sponsor, Rep. Richard Heath (R-Mayfield), said after the House Agriculture Committee approved the measure.

The Rural Kentucky Jobs Act of 2022 would specifically help small businesses in counties with fewer than 50,000 people, and businesses in some lower-income urban areas that are “designated opportunity zones” by the state.

“Let’s look at both sides of the coin,” Heath said. “OK, we are giving up some tax revenue, but look at the jobs we’re creating because of that.”

Every lawmaker on the House Agriculture Committee voted for it Wednesday except Rep. Josie Raymond (D-Louisville), who questioned why the incentives are only available to companies that have already invested $100 million.

“I don’t understand why you all can’t come and invest in rural Kentucky businesses that show a lot of promise on your own, and why this coupon is necessary for some very large, very wealthy investors.

Tony Toups with the investment firm Advantage Capital said investing in rural areas can be difficult.

“To get into rural areas is extremely expensive, and we also have to be very patient,” he said. “So getting into these areas and finding the good companies and then supporting them takes an incentive to make it all to work.”

And Heath said he wants to be cautious with taxpayer dollars.

“If you think about taxpayer dollars being invested in this and taxpayer dollars being put at risk, we need the security of knowing that we have people at the table that have a proven track record and have experience and know what they’re doing,” he said.

The bill also needs to clear a vote in the House Budget Committee before reaching the floor.

This will be the fourth time Heath has proposed a tax incentive to help create rural jobs. The only time it received a vote in the House was 2018, and it was not taken up by the Senate that year.

Editor's note: Rep. Josie Raymond is the wife of Spectrum News 1 Digital Reporter Adam Raymond.