Request By:
Mr. William Wiley
Committee Administrator
Interim Joint Committee on
Counties & Special Districts
Legislative Research Commission
Capitol Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
On behalf of the Interim Joint Committee on Counties and Special Districts, you request our opinion on questions relating to the dissolution of special districts.
Question No. 1:
"Assuming fiscal court or county judge/executive approval was necessary for the creation of a special district, would the Kentucky Constitution permit the fiscal court, after a public hearing, to dissolve the district? Dissolution in this case would be subject to a referendum if 25% of the registered voters of the district petitioned for it. A plan for satisfaction of liabilities fulfillment of contracts and distribution of remaining assets would also be required."
It is the understanding of the subcommittee members that, in terms of legal status as conferred by the Kentucky Constitution, special districts and counties are equal.
While special districts may be given some powers exercised by cities and counties, and while special districts, municipalities, and counties are creatures of the legislature, special districts cannot be equated with counties in the matter of dissolution. Section 63 of the Constitution gives the General Assembly the express power to create and abolish counties. Section 64, Constitution, provides that no county shall be divided or have any part stricken therefrom, except in making new counties, without submitting the question to a vote of the people of the county, and a majority vote thereof. See also § 65, Constitution, relating to voting restriction. There are no comparable provisions in the constitution relating to the creation or dissolution of special districts.
Thus the dissolution of special districts is left to the discretion of the General Assembly, provided no constitutional section is trampled upon. For example, no special district can be converted into a city.
Hurley v. Motz, 151 Ky. 451, 152 S.W. 248 (1913) 249. In addition, in order to comply with § 19, Constitution [prohibiting laws impairing obligation of contracts], the court in
Padgett v. Sensing, Ky., 438 S.W.2d 501 (1969) 503, emphasized that the proper application of the library districts statute guarantees that before a dissolution of such district can be effected, the library board must pay and settle its contractual obligations.
A Metropolitan Sewer District was characterized as a public body corporate, a political subdivision. The court said that the MSD was a "separate entity acting for its own purposes and possessing defined, though not limited, powers of a municipal community. It meets the conventional descriptions or definitions of a municipality. McQuillin, Municipal Corporations, § 126, 128."
Rash v. Louisville & Jefferson County Met. S. Dist., 309 Ky. 442, 217 S.W.2d 232 (1949) 236.
However, as we said, under the constitution, districts and counties cannot be equated within the frame of dissolution.
In specific answer to your question, we are of the opinion that a statute with such provisions as you mention would be constitutional. Although the Kentucky Constitution contains no express provisions for the public hearing or submitting either the creation or the dissolution of a special district to the voters, or a majority thereof, by petition or ballot, such devices, we think, are within the democratic tradition and would be construed as reasonable or rational, and not arbitrary. See § 2,
Kentucky Constitution, and Pritchett v. Marshall, Ky., 375 S.W.2d 253 (1963) 258. It would satisfy due process and fundamental fairness. In
Boggs v. Reep, Ky., 404 S.W.2d 24 (1966) 26, the court wrote that "We have previously observed that districts for specific purposes may be created without the consent of the residents affected." This principle would logically extend to dissolution. In
City of Covington v. District of Highlands, 113 Ky. 612, 68 S.W. 669 (1902) 671, the court said: "We are not prepared to say, however, that the creation of taxing districts . . . is contrary to the spirit or to any express provision of the present constitution . . . . but general provision for such form of government to be applied to particular localities, dependent upon a compliance with some general statute upon that subject, is quite clearly permitted." See also
Fraley v. Beaver-Elkhorn Water District, Ky., 257 S.W.2d 536 (1953) 538, on the point that it is generally recognized that improvement districts may be created by the legislature without regard to the consent of the residents of the district.
Question No. 2:
"Assuming fiscal court or county judge/executive approval was necessary for the creation of a special district, would the Kentucky Constitution permit the fiscal court, after a public hearing, to dissolve the district and at the same time assume its responsibilities? In this case the fiscal court would have to determine that such action would benefit the users of the district's service, and would assume all assets and liabilities."
The answer is "no". Under the constitution [see §§ 19 and 157, Ky. Const.], the district has a basic autonomy. Its tax rate is not the tax rate of the county. When it dies it must have a constitutional burial. That simply means prior to effective dissolution, all of its contractual debts must be paid off. See