Committee hears competing views on short-term rental bill; no vote taken on tax harmonization and preemption measures

The House Local Government committee heard hours of testimony on House Bill 490, a package that combines two principal elements: (1) a harmonization framework to standardize how short-term rental platforms collect and remit local transient occupancy taxes, and (2) preemption language that would limit local ordinances such as conditional-use permitting and density-based restrictions on short-term rentals. After extended testimony from business groups, tourism representatives and municipal officials, the committee did not take a final vote and deferred action.

Airbnb policy lead Vincent Ferlici told the committee the platform supports a harmonized, not centralized, electronic system for collecting local occupancy taxes and said Airbnb could begin collecting in remaining Kentucky jurisdictions “as soon as 30 to 60 days after enactment” if the bill’s uniform forms and electronic-payment rules are in place. Ferlici said: “House Bill 490 removes regulatory and legal uncertainty and confusion for Airbnb and will mean that all of our competitors should hopefully begin to join us in remitting to every city and town in the state.” He provided platform-collected figures in testimony: Airbnb hosts in Kentucky generated roughly $580,000,000 in economic activity and Airbnb remitted about $16,000,000 in guest taxes in 2024, with roughly $7.5 million remitted to cities and counties and about $7 million to the state for sales taxes.

Senator Steve West, appearing in support of the bill language that would preempt local conditional-use and density-based short-term rental restrictions, said the Senate portion would prohibit local governments from requiring a conditional-use permit or imposing density restrictions for short-term rentals while permitting cities to regulate noise, parking and similar operational matters. West said the measure protects property owners and supports tourism: “When people from outside the state want to visit Kentucky ... they’re expecting to have that Airbnb option.”

Opposition from local governments and tourism bodies The Kentucky League of Cities (JD Cheney) and the Kentucky Travel Industry Association (Hank Phillips) opposed the bill in its current form. JD Cheney said the League objects both to the bill’s preemption of local zoning tools and to the substitute’s tax-reporting mandates and called for Airbnb to comply with the tax law adopted in 2022 (House Bill 8) rather than shaping an alternative system in statute. Cheney urged the committee to allow pending litigation over unpaid taxes to proceed and to require the company to remit taxes that the League says are overdue.

Hank Phillips, representing county tourism commissions, said local transient-room taxes are the “lifeblood” of tourism commissions and that many commissions rely on the local revenues to fund marketing and visitor services. Phillips said VRBO and other competitors have paid local transient taxes since the state’s 2023 effective date for HB 8, while Airbnb has been selective in remitting, joining only some jurisdictions where it previously agreed to remit.

Tax and policy analysts Jared Walczak of the Tax Foundation framed the bill as “harmonization” rather than centralization: standard forms, uniform due dates, and an online index maintained by the Secretary of State showing local rates and electronic payment methods would reduce compliance costs and increase remittance, he testified.

Process and next steps Committee members questioned proponents and opponents, asked about existing litigation and about how the bill’s preemption would affect housing supply and neighborhood character. Chair Flannery said the committee would not vote that day and would continue conversations; the hearing closed without a committee recommendation.

What was not decided The committee did not approve the substitute nor adopt the preemption language; no committee vote was recorded. Stakeholders urged further negotiation on municipal payment mechanisms, whether a state-hosted database of local rates is sufficient, and whether the preemption language would have unintended housing-market effects.