Request By:
Mr. Ron Chumbley, Superintendent
Paris Independent Schools
P.O. Box 484
Paris, Kentucky 40361John J. Brady, Attorney
Paris Independent Schools
P.O. Box 484
Paris, Kentucky 40361
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Anne E. Keating, Assistant Attorney General
In your recent letter you requested an opinion of the Attorney General interpreting sections of House Bill 940, the Kentucky Education Reform Act, concerning the levying of a utility gross receipts license tax on cable television services. Your questions, in particular, concern KRS 160.614, which reads:
(1) A utility gross receipts license tax initially levied by a school district board of education on or after July 13, 1990, shall be levied on the gross receipts derived from the furnishing of cable television services in addition to the gross receipts derived from the furnishing of the services enumerated in KRS 160.613.
(2) A utility gross receipts license tax initially levied by a school district board of education prior to July 13, 1990, shall be levied on the gross receipts derived from the furnishing of cable television services, in addition to the gross receipts derived from the furnishing of the services enumerated in KRS 160.613, if the school district board of education repeats the notice and hearing requirements of KRS 160.603, but only as to the levy of the tax on the gross receipts derived from the furnishing of cable television services. (Enact. Acts 1990, ch. 476, Pt. III, Section 115, effective July 13, 1990).
Your questions concerning the statute follow:
1. Does the term "shall be levied" [in subsection (2)] make the Act mandatory?
2. Under the language of KRS 160.614(2) could a school system which had a utility gross receipts license tax in place prior to 7-13-90 refuse to include cable television services under that tax?
3. Does such enactment constitute a new tax or merely an addition to or enlargement of the class of liable tax payers?
4. If a Board complied fully with KRS 160.614(2) is such action to be subject to the recall provisions of KRS 160.597?
You explained that the interpretation of the Paris Independent School Board is that any system having an existing utility tax in place on July 13, 1990, shall levy the tax against cable television service and is required to give notice and hold a hearing as set forth in KRS 160.603.
The Paris Independent School System had adopted, prior to July 13, 1990, a utility gross receipts license tax as permitted by KRS 160.613. To comply with KRS 160.614, the Board gave notice and held a hearing on the application of the statute to cable television services. Following the hearing, on July 18, 1990, the Board, by unanimous vote, approved the inclusion of the cable television service under the provisions of the utility gross receipts license tax.
Later, the Board was notified that approximately 800 signatures had been submitted to the county clerk with a request that the resolution of the board to include cable television services in the utility gross receipts license tax be placed before the voters for approval. In discussions with the Department of Finance, the Kentucky School Board Association, and the Department of Education, the Paris Independent School Board has been advised that the intent of the legislature in enacting KRS 160.614 was to provide for mandatory inclusion of cable television services in any existing utility gross receipts license tax. The Board was further advised that notice and hearing procedures set forth in KRS 160.03 must be complied with, but that the inclusion of cable television services would not be subject to any recall procedure. The legislature reportedly did not authorize a new tax, but merely enlarged on the class of services subject to the tax.
Several statutes are germane to the issue presented:
1. KRS 160.593 gives boards of education the option of levying school taxes, including an occupational license tax, a utility gross receipts license tax, or an excise tax for schools. See Attachment A.
2. KRS 160.597 allows any of those school taxes to be recalled by stating:
Any school tax authorized by KRS 160.593 to 160.597, 160.601 to 160.633, and 160.635 to 160.648 may be recalled as follows: . . . . See Attachment B.
3. KRS 160.613 specifically authorizes a utility gross receipts license tax for schools not to exceed three (3) percent of the gross receipts derived from the furnishing, within the county, of several utilities but not mentioning cable TV. See Attachment C.
4. KRS 160.614, above quoted, requires in (1) that any utility gross receipts license tax enacted after July 12, 1990, must include cable television services as well as the services listed in KRS 160.613. Subsection 2 requires that any utility gross receipts license tax in effect on July 13, 1990, must be levied, in addition, on the gross receipts derived from the furnishing of cable television services; the local school district board of education is to repeat the notice and hearing requirements of KRS 160.603 as to the levy of the tax on the gross receipts from cable television services. KRS 160.615 describes when the taxes are payable, and KRS 160.617 allows utilities that are required to pay the tax to increase their rates by three percent for consumers. See Attachment D.
This office has previously opined that a board of education of a school district has no discretion as to the subject of the utility gross receipts license tax. OAG 66-551, copy enclosed.
In that instance, a board of education asked whether that board had the authority to levy a utility gross receipts license tax for schools and exempt certain utilities from the tax. Upon close scrutiny of KRS 160.613, the author concluded that there was nothing in the statutory language to indicate an intention on the part of the General Assembly to treat individual utilities listed in the statute differently. In looking at Part III of House Bill 471, it was evident that the General Assembly provided the school districts with three additional potential sources of tax revenue, but did not provide discretion to levy the taxes other than in the manner set forth by the legislature.
1. It is the opinion of this office that the plain language of KRS 160.614 clearly requires that effective July 13, 1990, utility gross receipts license taxes shall be levied on gross receipts derived from the furnishing of cable television services in addition to being levied on gross receipts from furnishing of services listed in KRS 160.613. Subsection (2) provides that any utility gross receipts license tax already in existence on July 13, 1990, shall be levied on the gross receipts derived from the furnishing of cable television services in addition to being levied on the gross receipts from furnishing services listed in KRS 160.613, and the procedures for doing so are set forth, those being notice and hearing requirements of KRS 160.603.
2. Under the language of KRS 160.614, any school system which already had a utility gross receipts license tax in place by July 13, 1990, which refuses to include cable television would not be in compliance with the statute.
3. It is the opinion of this office that the inclusion of cable television services under the utility gross receipts license tax is merely an enlargement of the class of utilities subject to the utility gross receipts license tax and not a new tax. This is evident from the language in Subsection (2), stating, "a utility gross receipts license tax initially levied by a school district board of education prior to July 13, 1990 . . . . " [Emphasis added.]
4. Accordingly, any board complying fully with the provisions of KRS 160.614 and KRS 160.603 is not subject to the provisions of KRS 160.597, which provides for a levy recall procedure following the initial implementation of the utility gross receipts license tax.