Request By:
Mr. William S. Riley
Executive Assistant
Department of Revenue
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You present questions pertaining to the revaluation of real property by the property valuation administrator.
KRS 132.690(1), as amended in 1980 (Ch. 319, § 4, effective July 15, 1980), reads:
"(1) Each parcel of taxable real property or interest therein subject to assessment by the property valuation administrator shall be revalued during each year of each term of office by the property valuation administrator at its fair cash value in accordance with standards prescribed by the department of revenue and shall be physically examined no less than once every two (2) years by the property valuation administrator or his assessing personnel."
Prior to the effective change in the statute, the PVA was required to "physically examine and revalue" only one-half of the real estate in his county each year.
You say assume that a PVA followed KRS 132.690(1) in effect prior to July 15, 1980. He assessed one-half of residential properties in his county, many of which received large increases, but did not increase in any way the other one-half of the residential properties in the county. Assume further that the PVA has already sent out Notice of Increases to taxpayers and the local Board of Assessment appeals has begun hearing appeals from the PVA's assessments. The Department has not yet certified the assessments in that county.
It is the Department of Revenue's position that if a PVA discovers that he has not assessed his county at fair cash value, it is his duty to make any correction necessary to arrive at that figure, even though he may have already sent some taxpayers Notices of Increases, held an inspection period, and given a copy of the tax rolls to the county clerk. The PVA contends that he cannot legally do anything more to his assessment in the way of making increases.
According to the Department of Revenue's calculations, the PVA's county in question is not at fair cash value for 1980. The Department of Revenue has not accepted the PVA's recapitulation (see KRS 133.040). The department sent the PVA a letter several months ago stating that increases must be made in his assessment to arrive at fair cash value.
You have two specific questions. Question No. 1:
"Is the tax roll 'closed' (finalized) after the KRS 133.045 inspection period or after any other statutory act?"
The critical and overarching principle which the PVA must bring to bear on his function as an assessor of property is found in § 172 of the Kentucky Constitution, which provides that all property subject to taxation under this constitution must be assessed for taxation at its fair cash value. Beginning with the landmark case of Russman v. Luckett, Ky., 391 S.W.2d 694 (1965), the courts took the position that commencing with January 1, 1966, positive compliance with that definite standard of "fair cash value" and with any implementing statutory law (see KRS 132.450(1)) would be required. The PVA's have had some fourteen (14) years to bring property assessments up to fair market value.
KRS 133.040 requires the PVA to complete the tax roll of all property in his county before the first Monday in May of each year; and on or before that date he must file with the Department of Revenue a recapitulation of all property assessed on the tax roll. KRS 133.040(1) provides in part:
"Within thirty (30) calendar days after receiving the recapitulation the department of revenue shall direct the property valuation administrator to make any changes that are necessary to correct the assessment. The department of revenue shall preserve all recapitulations and schedules or a photographic facsimile thereof for a period of seven (7) years from the assessment date."
KRS 133.045, relating to the inspection of the tax rolls, reads:
"(1) The tax roll being prepared by the property valuation administrator for the current year, shall be open for inspection in the property valuation administrator's office for twelve (12) days beginning on the fourth Monday in May of each year and shall be open for inspection for six (6) days each week one (1) of which shall be Saturday. In case of necessity, the department of revenue may order a reasonable extension of time for the inspection period of the tax roll or it may order that the inspection period be at a different time than that provided herein.
"(2) The property valuation administrator shall cause to be published once during the week before the beginning of inspection period, as provided in subsection (1) of this section, in a display type advertisement, the following information:
(a) The fact that the tax roll is open for public inspection;
(b) The dates of the inspection period;
(c) The times available for public review of the tax roll; and
(d) Instructions which provide details on the manner in which a taxpayer may file an appeal, if he is aggrieved by an assessment made by the property valuation administrator.
The cost of such notice shall be paid by the fiscal court of the county. Such notice shall also be posted at the courthouse door. Failure to publish or post notices when the inspection period is at the regular time as provided in this section shall not invalidate assessments made by the property valuation administrator and recorded on the tax roll prior to the inspection period."
Pursuant to KRS 133.120, any taxpayer aggrieved by an assessment made by the PVA may appeal to the county board of assessment appeals. After a hearing, the board fixes the assessments on appeal at their fair cash value. Subsection (5) of KRS 133.120 reads in part:
"No appeal under this section shall delay the collection or payment of any taxes based upon the assessment in controversy."
The county board of assessment must convene, pursuant to KRS 133.030, at the county seat on the second Monday in June of each year; except that no meeting shall be held until the tax roll has been completed and the inspection period provided as required by the above mentioned statute, and until any "revaluation of the property has been completed by the property valuation administrator at the direction of the department of revenue as provided by KRS 132.690. . . ." (Emphasis added). Under KRS 132.690(2), any PVA wilfully violating the provisions of subsection (1) (revaluation) or who refuses to comply with the directions of the Department of Revenue to correct the assessment shall have his compensation suspended by the department and shall be subject to removal from office.
Since the amendment to KRS 132.690 became effective on July 15, 1980, it is our opinion that the PVA is not required to revalue for 1980 taxes the other one-half of the properties now required under the amendment. The legislature could have easily provided an emergency clause for immediate effect upon the signing of the bill by the Governor. Instead, they chose July 15, 1980. In addition, the statute contains no provision for retroactivity. See KRS 446.080(3), and Taylor v. Asher, Ky., 317 S.W.2d 895 (1958).
In view of the fact that the major events relating to the "assessment" process of 1980, as pertains to the PVA, have already taken place, that is, the PVA's making up the assessments for tax rolls for 1980, providing the inspection period, giving notices of increases, and filing the recapitulation of all property assessed on the tax rolls, it is our opinion that the tax roll, as concerns this PVA, as a whole is closed for the tax year of 1980.
Although under KRS 133.040 the Department of Revenue had 30 days after receiving the recapitulation to direct the PVA to make necessary changes to correct the assessment, the subject matter of the proposed change was the revaluation of the remaining one-half of the properties. Since we reason that the 1980 amendment of KRS 132.690 was not intended by the legislature to be meshed or integrated with the 1980 tax assessment process, we think the PVA was correct in saying that for 1980 he cannot revalue the other one-half of the properties.
If the department's hold up on the recapitulation and certification of the county assessment only hinges on the question of revaluation of the remaining one-half of the properties, we think the Department should now go ahead and approve the recapitulation and certify the county assessment.
Question No. 2:
"Can the PVA now go out and assess (for 1980) the one-half of the residential parcels that have not yet been increased?"
We have answered that above. For reasons just given, we do not think the PVA can revalue the assessments of the remaining one-half of the properties.
It is true that assessments must mandatorily conform to the strict requirement of § 172, Constitution, that is, the standard of "fair cash value. " However, the General Assembly has provided a detailed scheme of tax events within which frame the matter of assessment must be conducted, in order that taxation can be carried on in a reasonable and constitutional way, and in order that the collection of taxes can be effected in a timely and orderly fashion. Governments can only exist by collecting taxes. Delayed collection results in severe financial stress, with the ultimate additional cost being borne by the taxpayers. Our analysis and conclusion supports the pragmatic matter of tax collections for the governments. As Judge Thomas said in Nuetzel v. Will, 210 Ky. 453, 276 S.W. 137 (1925) 138, concerning statutory interpretation, ". . . the language should receive a practical construction, and be so interpreted as to preserve and carry out the purpose in its enactment in such a manner as to remove all hindrance from its easy and simple compliance." From this "practical construction" viewpoint, we believe our interpretation is a practical one in view of the time sequences of the assessment and tax collection processes.