Request By:
Mr. A. T. Wood
Clerk, Kenton County Court
P.O. Box 788
Convington, Kentucky 41012
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter of September 4, 1981, you raised a question with regard to the validity of a special fiscal year created by the Northern Kentucky Area Planning Commission to be financed by a separate ad valorem tax levy. The authority for an area planning commission to levy an ad valorem tax is found in KRS 147.660(1). That statute reads, in pertinent part, as follows:
"The area planning commission created hereunder, when accepted by the cities and counties affected as provided for herein, shall then be a political subdivision and shall be in perpetual existence, with power to . . . levy an annual tax, which shall not exceed more than five cents (5 ) upon each one hundred dollars ($100) of the assessed valuation of property within the counties affected, to be used for the purpose of defraying all expenses necessary and incidental to carry out the continuing activities of the area planning commission. This tax shall be certified to the auditors and county clerks of the various counties and by them to the respective treasurers of the counties, signature to the contract provided for in KRS 147.620. The tax shall be based upon the last preceding assessment for state and county purposes. Its collection shall be imposed upon all property within the counties participating and shall conform to the collection of taxes for counties and the same provisions concerning the nonpayment of taxes shall apply . . . ." (Emphasis added)
The rate for ad valorem tax purposes which an area planning commission can levy is further limited by the provisions of KRS 132.023. See
Northern Kentucky Area Planning Commission v. Hensley, Ky., 468 S.W.2d 293 (1971). There is no authority for any area planning commission to levy an ad valorem tax in excess of the maximum rate established by KRS 132.023 for any taxable period.
In order to bring its fiscal year into conjunction with that of the counties within its jurisdiction, the Northern Kentucky Area Planning Commission has changed from a calendar year basis of accounting to a fiscal year basis to begin on July 1 and end on June 30. To effectuate this change in accounting, the commission created a special fiscal year beginning on January 1, 1981 and ending on June 30, 1981 which was to be financed by an ad valorem tax based upon an estimate of the January 1, 1981 assessed valuation for county purposes. An estimate was used because, at the time the special fiscal year was created, the January 1, 1981 property valuation for county purposes had not been certified by the Department of Revenue.
The General Assembly has made no provisions with regard to the fiscal year of an area planning commission. However, in KRS 147.660(1), quoted above, the General Assembly has provided that the collection of an area planning commission's ad valorem tax is to conform to the collection of taxes for counties. KRS 68.060 provides, in pertinent part, as follows:
"The fiscal year of each county shall begin on July 1, and end on June 30 next following. All county reports, budgets, appropriations and tax levies shall be made with reference to specific years or fractions thereof." (Emphasis added)
In 1934, the General Assembly, at its regular session, changed the fiscal year of the counties to begin July 1 and end June 30 next following. See Chapter 151, Session Acts 1934. As a result of the change there occurred a six month period for which no ad valorem tax levy had been provided. In
Jefferson County Fiscal Court v. Jefferson County, 257 Ky. 547, 78 S.W.2d 324 (1934), the Kentucky Supreme Court (then the Kentucky Court of Appeals) issued a declaration of rights with regard to the validity of a special fiscal year created by the Jefferson County Fiscal Court to account for this six month period and the ad valorem tax levied to finance it. The Court, at page 325, declared as follows:
"If funds are not otherwise available, as from a surplus carried over, the fiscal court is authorized to make necessary levies to provide revenues for the fiscal year, 1934-1935, to meet expenses for the last half of that fiscal year, based upon the assessment of July 1, 1934, and collectable along with the taxes for the fiscal year 1935-36, which will become delinquent on March 1, 1936." (Emphasis added)
In view of the provisions of KRS 147.660(1), KRS 68.060 and the Jefferson County Fiscal Court v. Jefferson County decision, supra, both the creation of a special fiscal year by an area planning commission to bring its fiscal procedures into agreement with the fiscal procedures of the counties located within its jurisdiction and the levy of an ad valorem tax to finance the special fiscal year would be valid. In addition, the tax assessment for the special fiscal year could be collected together with the taxes for the current fiscal year. However, if the two assessments are billed to the taxpayers on the same document, each assessment must be separately stated and the taxpayer made aware of the statutory protest remedies with regard to each assessment.
In considering the ad valorem tax levied by the Northern Kentucky Area Planning Commission to finance its special fiscal year beginning on January 1, 1981 and ending on June 30, 1981, the use of the estimated valuation for property as of the January 1, 1981 assessment date was improper. For ad valorem tax collection purposes, it is absolutely necessary that an assessment be made before the levy can be imposed. KRS 133.185 provides that:
"No tax rate for any taxing district imposing a levy upon the county assessment shall be determined before the assessment is certified by the department of revenue to the county clerk as provided in KRS 133.180." (Emphasis added)
In
National Distillers Products Corp. v. Board of Education, Ky., 256 S.W.2d 481 (1952), at page 484, the Court ruled that for ad valorem tax collection purposes "the assessment is a condition precedent to the levy of the tax." Therefore, in order to be valid, the ad valorem tax levied by the Northern Kentucky Area Planning Commission to finance its special fiscal year must be based on the certified property valuation assessment made on January 1, 1980.
In conclusion, if the Northern Kentucky Area Planning Commission changes its ad valorem tax levy to make it comply with the law as discussed herein, the levy to finance the special fiscal year will be valid.