Request By:
Mr. John R. Cox
Rowan County Attorney
P.O. Box 9
Morehead, Kentucky 40351
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The Rowan County Fiscal Court is contemplating enacting an ordinance providing a county payroll tax. The city of Morehead, located in Rowan County, presently has in effect a payroll tax affecting those people employed within the city limits. You indicate that the revenue from such county tax is needed to complete the county's judicial facilities building. You raise questions as to whether the Rowan Fiscal Court can enact such a tax measure without submitting the question to the electorate; and whether the county ordinance could be applied to the people working within the city of Morehead.
Since Rowan County has less than 30,000 population [see KRS 68.197], the Rowan Fiscal Court can enact by ordinance a general license or occupational tax. This is authorized by KRS 67.083(2), as an implementation of Section 181, Kentucky Constitution. See Fiscal
Court, Etc. v. City of Louisville, Ky., 559 S.W.2d 478 (1977), specifically upholding KRS 67.083, as relates to enacting a tax ordinance, as an implementation of Section 181, Kentucky Constitution. Of course, we assume that the county is not contemplating a public service program, as defined in KRS 68.520. You speak only of a capital project. A public service program requires that such proposal be submitted to the electorate. KRS 68.520(3).
The general rule is that municipal corporations have no extraterritorial powers in the absence of specific legislative authority, and their jurisdiction ends at the municipal boundaries. 56 Am.Jur.2d, Municipal Corporations, Etc., Section 228, p. 288. Thus a county can exercise its powers within the county boundaries, including cities within the county, except where a statute expressly excludes such cities from the exercise of such powers.
The analogy to the county's ad valorem tax is significant. It is well established in Kentucky law that the county's ad valorem tax can be levied on all property within the county boundaries, including property located in cities, which cities are within the county boundaries. The recognition of such power is based upon both constitutional and statutory sections.
Section 171, Kentucky Constitution, in treating ad valorem taxes, states that "Taxes shall be levied and collected for public purposes only and shall be uniform upon all property of the same class subject to taxation within the territorial limits of the authority levying the tax." (Emphasis added).
Section 181, Constitution, treating the license tax, provides in part that the General Assembly may, by general laws, confer on counties and cities the authority to levy license taxes.
Under Section 180, Constitution, the General Assembly may authorize counties and cities to levy a poll tax.
KRS 68.090(1) provides in part that "For county purposes the fiscal court of each county shall levy an ad valorem tax on all property subject to county taxation. " (Emphasis added). Under KRS 132.280, "The assessment made for state purposes, when supervised as required by law, shall be the basis for the levy of the ad valorem tax for county. . . ."
In
City of Richmond v. Madison County Fiscal Court, 290 Ky. 293, 161 S.W.2d 58 (1942) 61, the court, in speaking of the county's ad valorem taxes, wrote that "All property located in the county is liable for its ratable proportion of the taxes levied for a purpose common to the entire county. " (Emphasis added). There the court was simply saying that the county's ad valorem taxes may be levied on all property within the county's boundaries, including property located within cities, which cities are within the county. In
McInerney v. Huelefeld, 116 Ky. 28, 75 S.W. 237 (1903) 238, the court held in effect that the Kenton Fiscal Court had the authority to levy ad valorem taxes "upon all the property within the entire county, whether located inside or outside of the city of Covington. . ." (Emphasis added). The court pointed out in
Short v. Bartlett, 114 Ky. 143, 70 S.W. 283 (1902), that "Under the constitution and enactments of the legislature, a county, through its fiscal court, can levy an ad valorem tax within the constitutional limitations on all property in the county for county purposes, whether situated in the county, outside of cities and towns, or in them, and, in the same way, may levy a poll tax for the same purpose upon citizens both inside and outside of cities or towns located therein." (Emphasis added).
The significant language in the constitution and statutes permitting counties to levy its ad valorem taxes on all property within the county boundaries, including property located in the county's cities, is framed around the recognition of the county's tax power throughout all county territory, including municipal territory. And there is no constitutional nor statutory exception as relates to the situs of property within the county's municipalities.
Turning now to the county license tax, KRS 68.180 [relating to Jefferson County], describes the jurisdictional territory as applying to "persons within the county. . . .", and "businesses . . . conducted in the county." (Emphasis added). There are no exceptions for persons and businesses in cities located in the county. In fact, in KRS 68.190 provisions are made for credit for payment of a city license tax. In counties containing a population of 30,000 or more, certain restrictions are imposed. However, in connection with the geographical area in which the license tax may be levied, the statute speaks of persons with salaries earned "within the county" for work done "in the county" (Emphasis added). It speaks of businesses "conducted in the county" (Emphasis added). No exception is made of persons working in and businesses operating in cities located in the county.
Under KRS 67.083(2) it is provided that "The fiscal court of any county is hereby authorized to levy all taxes not in conflict with the constitution and statutes of this state now or hereafter enacted." Subsection (7) of KRS 67.083 provides that county ordinances which prescribe penalties for their violation "shall be enforced throughout the entire area of the county" unless otherwise provided by statute or the legislative body of any city within the county has adopted an ordinance pertaining to the same subject matter which is the same as or more stringent than the standards that are set forth in the county ordinance. (Emphasis added). It is clear that the exception to the countywide effect of county ordinances involves either some contrary statute or a city ordinance involving something other than a license tax.
Since the above three statutes just cited concern the same subject, they should be read together and construed as being in pari materia. Judge Montgomery, for the court, wrote, in
Economy Optical Co. v. Kentucky Board of Opt. Exam., Ky., 310 S.W.2d 783 (1958) 784, that "The rule is that statutes in pari materia should be construed together and, if possible, should be construed so as to harmonize and give effect to provisions of each."
In reading all the county license tax statutes together, and considering the statutory and case law history of ad valorem taxes by way of applicable analogy, it is our opinion that the fiscal court of your county may levy such license tax on all persons working and businesses operating within Rowan County, including those located within the city of Morehead. All those statutes speak in terms of the tax being applied within the county's boundaries, including cities located therein.
It may be noted that this will not involve taxation without political representation, since the people living and working in the city of Morehead are also within certain magisterial districts that include all of the county territory. Further, under KRS 67.045, justices of the peace are elected to represent the various districts of the county, which include city territory. Thus the county's license tax and its county purpose, for purposes of the expenditure of revenue therefrom, will involve the whole county area, including the city territory. See
City of Lexington v. Hager, Ky., 337 S.W.2d 27 (1960) 28; and Section 171, Kentucky Constitution. A public purpose of the county, to be applied countywide, such as to embrace cities within the county, would have to affect and be beneficial to all of the county inhabitants, including those within cities located within the county.
Grise v. Combs, Ky., 342 S.W.2d 680 (1961) 686. The expenditure of public monies must promote the general welfare of those taxes to sustain it. We see no reason why the county judicial facilities building would not benefit the people of Morehead as well as the other county citizens. See KRS 67.080(2)(b), 67.083(3)(p) and (q), and 26A.100.
The application of the county license tax to the people in Morehead would not involve double taxation, since to constitute double taxation the two taxes must be imposed on the same property by the same governing body during the same taxing period for the same taxing purpose.
Second Street Prop. v. Fiscal Court of Jefferson County, Ky., 445 S.W.2d 709 (1969) 715.
Based upon the constitutional and statutory sections mentioned above, the cases cited, and the foregoing analysis, it is our view that the General Assembly, in legislating concerning the county's license tax, has indeed been consistent in its policy relating to the territorial application of the two county taxes (ad valorem and license taxes).
SUMMARY
We conclude that: (1) The Rowan County Fiscal Court may enact a general license tax ordinance without a vote of the electorate. (2) The tax may be applied effectively to all persons working and businesses operating within the county boundaries, including persons working and businesses operating within the city boundaries of Morehead.