Request By:
Ms. Eula Jean Smith
L.B.J. Elementary School
Jackson, Kentucky 41339
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in response to your letter of March 8, in which you raise the following question:
"Is it legal for the city officials of a city in which we do not live and cannot vote, to levy a payroll deduction tax and city sticker fee on us? We are county teachers paid by the state and county. Their reason for this is because the Board of Education building and four of the counties' eight schools (paid for by the county) are now located within the city limits."
Every city outside of a city of the sixth class is authorized to levy an occupational tax, or so-called payroll tax, on all individuals who earn a living within the city limits, irrespective of whether or not they legally reside within the city. The initial case on the subject was City of Louisville v. Sebree, 308 Ky. 420, 214 S.W.2d 248 (1948). In the case of Cook v. Commissioners of the Sinking Fund of Louisville, 312 Ky. 1, 226 S.W.2d 328 (1956), the Court pointed out that the immunity of the federal government from taxation does not extend to such government's officers or employees.
The state legislature has also enacted KRS 82.090 which specifically authorizes cities to impose occupational taxes on state officers and employees, such as, for example, school teachers. This statute reads as follows:
"(1) The legislative boards or councils of the cities of this Commonwealth are hereby severally authorized by ordinances applying to occupations generally to impose occupational taxes upon all state employes and officers whether appointive or elective, for services performed therein, except those elected officers who are paid on a per diem basis.
(2) Except as provided in subsection (1) of this section, no person shall be relieved from liability for any occupational license tax levied for revenue purposes by any legislative board or council of a city of this Commonwealth by reason of his carrying on his occupation or performing services on any state property or area within the bounds of such city."
There is also a recent case holding that a city occupational tax is valid against circuit judges. See Commissioners of Sinking Fund v. Hopson, Ky., App., 613 S.W.2d 621 (1980). We also call your attention to Batten v. Hambley, Ky., 400 S.W.2d 682 (1966); Ratliff v. Lexington-Fayette County Urban Government, 540 S.W.2d 8 (1976); Patrick v. City of Frankfort, Ky., 539 S.W.2d 275 (1976), and Khaler v. Benckert, Ky., 252 S.W.2d 854 (1952).
Under the circumstances it is clear that a city may impose a payroll tax on the salary of school teachers who earn their living teaching school within the corporate limits of the city, irrespective of the fact that it is earned on state property.
A city may also impose automobile license sticker fees on all individuals who regularly operate their automobiles within the city pursuant to the police power of said city. It is a valid tax imposed for the use and upkeep of the city streets, as we have pointed out in many opinions, among them being OAG 80-202 (copy attached). This opinion deals particularly with teachers and students driving their cars to and from the schools in which they are employed or attend, irrespective of whether or not they legally reside within the city.