Request By:
Mr. Thurman R. Baker
Finance Director
Finance Department
P.O. Box 2267
Paducah, Kentucky 42001
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
In your recent letter to the Attorney General, it is stated that the City of Paducah is currently preparing its annual tax rate ordinance for municipal and school purposes for the period from July 1, 1978 through June 30, 1979.
Under Section (5) of the ordinances, the city is changing the Sinking Fund rate for the retirement of bonds from.0313 to.0235 and the rate for the payment of interest on the bonds from .0393 to.0295. This change is being made as a result of excess funds in the Sinking Fund caused by increased property values. The result is an overall reduction in the Sinking Fund rate of.0176.
The question is whether a reduction of.0176 can be added to the General Fund rate maintaining the overall tax rate or must the reduction be carried to the bottom line reducing the overall rate.
KRS 132.027 provides that generally notwithstanding any statutory provisions to the dcontrary, no city shall levy a rate which exceeds the compensating tax rate defined in KRS 132.010 except that cities which levied a poll tax in 1973 may include the revenues received from the poll tax in that year in computing the compensating tax rate for 1974 and subsequent years.
KRS 132.010(6) defines "compensating tax rate" as a tax rate which, rounded to the next higher one-tenth of a one cent ($ .001) per one hundred dollars ($100) of assessed value and applied to the 1972 assessment of the property subject to taxation by a taxing district, excluding net assessment growth, as defined in KRS 132.425 produces an amount of revenue approximately equal to that produced in 1971.
If the Sinking Fund rate is a part of the overall General Fund rate, it would appear that the only thing that is being done is a shifting of a part of the Sinking Fund rate to the main General Fund rate. If this is so, the.0176 could be added to the General Fund rate maintaining the overall tax rate at the same level.