Request By:
Mr. R. Michael Amyx
Executive Director
Kentucky Municipal League
Suite 201 Bradley Hall
University of Kentucky
Lexington, Kentucky 40506
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Joseph R. Johnson, Assistant Attorney General
You have brought to our attention that two (2) recently issued opinions of this office have generated confusion concerning whether House Bill 44 can be applied retroactively to governmental units operating on a calendar year basis.
KRS 132.027(1)(a) as amended by House Bill 44 states as follows:
Notwithstanding any statutory provisions to the contrary, no city or urban-county government shall levy a tax rate for 1979-80 which will produce more revenue, exclusive of revenue from net assessment growth, than would be produced by application of the maximum tax rate that could have been levied in 1978-79 to the 1978-79 assessment.
KRS 132.010(6) provides as follows:
"Compensating tax rate' means that rate which, rounded to the next higher one tenth of one cent ($ .001) per one hundred dollars ($100) of assessed value and applied to the current year's assessment of the property subject to taxation by a taxing district, excluding new property and personal property, produces an amount of revenue approximately equal to that produced in the preceding year from real property. However, in no event shall the compensating tax rate be a rate which, when applied to the total current year assessment of all classes of taxable property, produces an amount of revenue less than was produced in the preceding year from all classes of taxable property.
House Bill 44 became effective February 13, 1979 pursuant to an emergency clause in the statute. In OAG 79-217, we concluded that by the time this law became effective, many governmental units operating on a calendar year basis had already prepared their budgets covering calendar year 1979. Because the local officials had already established 1979 tax revenues based on a tax rate developed on the then existing statutes, we concluded that House Bill 44 could not be applied retroactively as to such units.
In OAG 79-484, it was stated that OAG 79-217 is withdrawn. However, having considered the practical consequences of such a position and the fact that many governmental units have relied in good faith on our earlier opinion, we have found it necessary to modify OAG 79-484 to the extent that OAG 79-217 is hereby reinstated and reaffirmed.
KRS 132.027(4) provides that the portion of a tax rate levied by a city or urban-county government which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate shall be subject to a recall vote or reconsideration by the taxing district. After an ordinance is adopted exceeding the four percent (4%) threshold, a notice must be published within seven (7) days stating that the taxing district has adopted such a rate, that the rate is subject to recall, and the name, address, and phone number of the county clerk with a notation that the clerk can provide information about the required petition to initiate a recall of the tax rate.
The recall petition provision is found in KRS 132.017. It provides that the portion of the tax rate subject to recall shall not go into effect until forty-five (45) days following passage. If during the forty-five (45) day waiting period, a petition is presented to the county clerk or legislative body of the city or urban-county government signed by registered voters equal to ten percent (10%) of the voters voting in the last presidential election, the ordinance shall be suspended and the question of whether the property tax rate shall be levied shall be submitted to the voters at the next regular election. The legislative body may cancel the election by reconsidering and amending the ordinance so as to avoid producing more than four percent (4%) revenue over the amount of revenue produced by the compensating tax rate.
Because there are only thirty-seven (37) days remaining prior to the next regular election on November 6, 1979, it can be readily ascertained that House Bill 44 cannot be applied retroactively to taxing districts operating on a calendar basis which had prepared their budgets prior to the effective date of House Bill 44. We will forward a copy of this letter to the Legislative Research Commission so as to apprise that agency of the problem discussed herein.