Request By:
Mr. Thomas R. Abell
President, Board of Trustees
Grayson County Hospital District
64 Public Square
Leitchfield, Kentucky 42754
Opinion
Opinion By: Steven L. Beshear Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The question, on behalf of Grayson County Hospital District, and underlying facts, you present to this office for an opinion, reads as follows:
Recently, the Grayson County Judge Executive informed me, as President of the Grayson County Hospital District, that he had been informed by the State Auditors that the Grayson County Hospital District is responsible for the bonding of the Grayson County Sheriff for that amount of tax revenue which the sheriff is responsible for collecting on behalf of the Grayson County Hospital District.
If this is a correct interpretation by the State Auditing Office and/or Grayson County Judge Executive, we would appreciate your earliest confirmation of this interpretation in order that we may properly carry out our responsibilities as Trustees of the Grayson County Hospital District.
We were informed by the Grayson Hospital Administrator that the hospital district was created under KRS 216.310 to 216.360; and the first operational year was 1974. The hospital district received its favorable vote of the people in 1973, pursuant to KRS 216.317.
Under KRS 216.317(1)(c), the hospital district constitutes and is a taxing district within the meaning of § 157 of the Kentucky Constitution.
KRS 216.317(1)(e) provides that "all special ad valorem taxes authorized by KRS 216.310 to 216.360 shall be collected in the same manner as are other county ad valorem taxes in each county affected and shall be turned over to the board as the governing body of the district." (Emphasis added). See also KRS 216.320, stressing the separate taxing district aspect, and KRS 216.335(14), relating to the powers of the Board of the Health District in terms of formulating the district tax and certifying the same to fiscal court and to each county clerk for inclusion on the tax bills of property owners in the district.
The sheriff, by virtue of his office, is collector of all state, county and district taxes, except where a statute directs otherwise. See KRS 134.140.
In connection with the sheriff's revenue bond, relating to his faithful performance as a tax collector, KRS 134.230(1) reads:
"(1) The sheriff shall, before he qualifies and before he assumes the duties of the office for the first time, enter into bond with surety for the faithful performance of his duties as revenue collector. The bond shall cover liability to account, as provided by law, for all charges of taxes made against him, and for all money received by him as revenue collector from the date he assumes the duties of the office to and including May 31 of the same year. He shall enter into bond with surety thereafter before or as of June 1 of each succeeding year of the term of his office, except that the expiration date of the bond for the last year in the term shall be to and including March 15. The county judge/executive shall hold a hearing at any time the sheriff may request for the purpose of executing bond. (Emphasis added).
First, the sheriff is required by KRS 70.020 to execute a bond for the faithful performance of his duties. This is in addition to the bond required under KRS 134.230, above.
In Muncy v. Keen, Ky.App., 619 S.W.2d 712 (1981), the Court of Appeals upheld the county judge executive's insistence that the county sheriff, under KRS 70.020 and 62.060, execute a general performance bond at $300,000, the court noting that the revenue bonds posted were inadequate to secure the aggregate tax receipts of the county. The opinion suggests that this general performance bond, in case of default in accounting for taxes collected for the state, county, or special taxing district, may be relied upon as a supplemental matter to the pertinent revenue bonds executed by the sheriff.
The sheriff is required to execute a county levy bond to the Commonwealth, under KRS 134.250, with the county judge executive. That bond is designed to cover the county in connection with the sheriff's accounting for county taxes collected. It is a faithful performance bond.
The general revenue bond of KRS 134.230, which is the specific issue here, must be set for no less than the aggregate amount of state, county, and special district tax receipts for each year the bond is in force. KRS 134.230(1) states in part that:
"This bond shall cover liability to account, as provided by law, for all charges of taxes made against him, and for all money received by him as revenue collector . . . ." (Emphasis added).
Under the statute, KRS 134.230, the county judge executive shall hold a hearing at any time the sheriff may request for the purpose of executing the bond. See Leslie County v. Maggard, 212 Ky. 354, 279 S.W. 335 (1926); and Gay v. Jackson County Board of Education, 205 Ky. 277, 265 S.W. 772 (1924). When all the subsections of that statute are read together, the amount of the bond, and the capacity of the sureties to pay off if necessary, must be fixed in terms of the aggregate of the taxes collected by the sheriff for the state, county, and special taxing districts. One basic purpose of the bond in KRS 134.230 is to prevent the sheriff from having tax funds in his possession in excess of his general revenue bond.
There is no statute breaking down the expense of the bond premium in terms of the various tax authorities concerned. Actually, the premium on the general revenue bond (KRS 134.230) must be finally paid by the state under the terms of KRS 62.155, but, constitutionally, the state's paying of the premium can only be based upon that portion of the bond coverage which could be properly allocated to the collection of state taxes. The Court of Appeals, in Miller v. Sturgill, 304 Ky. 823, 202 S.W.2d 632 (1947) 633, pointed out that a county revenue bond is for a strictly local purpose, and the payment of any sum by the state for such purpose would be violative of §§ 176, 177 and 181 of the Kentucky Constitution. Section 176, Constitution, prohibits the state from assuming the debts of any county, municipal corporation or political subdivision. Section 177, Constitution, prohibits the state's lending its credit to a political subdivision.
CONCLUSION
1. It is our opinion that the Grayson County Hospital District, through its Board, is responsible for paying that portion of the premium on the general revenue bond, pursuant to KRS 134.230, which is practicably applicable to that portion of the bond coverage reflecting taxes collected by the sheriff for the hospital district.
2. The hospital district board has the duty of indicating to the county judge executive the approximate amount of hospital district taxes which will be in the possession of the sheriff under the sheriff's reporting scheme for a particular tax year, in order that the general revenue bond may adequately reflect coverage embracing such hospital district taxes collected. See KRS 134.300.