Request By:
Mr. Phillip Bruce Leslie
Corporate Counsel
City of Flatwoods
Main & Harrison Streets
Greenup, Kentucky 41144
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter to the Attorney General you ask if, pursuant to KRS 132.027, the City of Flatwoods may apply its 1980 tax rate to its 1981 assessment without being subject to a recall vote or reconsideration. You further state that application of this tax rate to the 1981 assessment, which as a result of a recent Supreme Court case has greatly increased, will result in an increase in tax revenues greater than 4% over the previous year.
KRS 132.027(1)(b) states that no city shall levy a tax rate which will produce more revenue, exclusive of revenue from net assessment growth, than would be produced by application of the tax rate that was levied in the preceding year to the preceding year's assessment.
KRS 132.027(2) states that no city shall levy a tax rate which exceeds the compensating tax rate defined in KRS 132.010(6) until the city has complied with KRS 132.027(3) (public hearing, etc.). KRS 132.027(4) also provides for a recall vote or reconsideration of that portion of a tax rate levied by a city which will produce revenue more than 4% over the amount of revenue produced by the compensating tax rate.
If that rate which you wish to levy will produce revenue that is more than 4% over the amount of revenue produced by the compensating tax rate or which itself exceeds the compensating tax rate (whatever that rate is determined to be for your city) KRS 132.027(3) and (4) must apply.
The situation causing the increased assessment is irrelevant to the application of KRS 132.027. In fact, it appears to be the intent of the General Assembly to limit revenues from property tax (subject to a vote of the taxpayers) when assessments have increased.
Net assessment growth is defined in KRS 132.010(7) as the difference in the total valuation of property subject to taxation by the taxing district in the preceding year less the total valuation exempted from taxation by the homestead exemption provision of the Constitution in the current year over that exempted in the preceding year, and the total valuation of property subject to taxation by the taxing district for the current year.
This definition does not refer to an increase in the assessment for the reason stated in your letter.