Request By:
Stephen Wood, Grant County Judge/Executive
Opinion
Opinion By: ANDY BESHEAR, ATTORNEY GENERAL; Sam Flynn, Laura Tipton, Assistant Attorneys General
Opinion of the Attorney General
Stephen P. Wood, Grant County Judge/Executive, has requested an opinion of this office regarding whether the Grant County Fiscal Court has the authority to create a 911 district under KRS Chapter 65. Judge/Executive Wood further has requested an opinion regarding whether the Grant County Fiscal Court may raise funds for the purposes of establishing and operating a 911 district. In particular, Judge/Executive Wood has asked whether it would require the approval of the Kentucky Public Service Commission ("PSC") to apply a "user fee" for 911 services to water customers in a non-municipally owned water district.
For the reasons stated below, we advise that the Grant County Fiscal Court does have the authority to create a 911 district and to raise funds for its establishment and operation pursuant to KRS 65.760. We further advise, however, that raising such funds via a "user fee" applied to water customers would require PSC approval. In contrast, PSC approval may not be required to impose a charge for 911 services on every water meter located in Grant County.
With respect to Judge/Executive Wood's question regarding authority to create a 911 district, KRS 65.760(1) expressly provides:
Any local government may establish 911 emergency service upon approval of the governing body of the city, county, or urban-county government and may adopt regulations concerning the provision of this service by ordinance.
Because the Grant County Fiscal Court is the governing body of Grant County, we find that the Grant County Fiscal Court has the authority to establish a 911 emergency service under KRS Chapter 65, and specifically KRS 65.760(1).
With respect to Judge/Executive Wood's question regarding authority to raise funds for 911 emergency services, KRS 65.760(3) provides:
The funds required by a local government to establish and operate 911 emergency service . . . may be obtained through the levy of any special tax, license, or fee not in conflict with the Constitution and statutes of this state. The special tax, license, or fee may include a subscriber charge for 911 emergency service that shall be levied on an individual exchange-line basis, limited to a maximum of twenty-five (25) exchange lines per account per government entity.
Accordingly, the Grant County Fiscal Court may raise funds to establish and operate a 911 emergency service through a special tax, license, or fee under KRS 65.760(3).
In Greater Cincinnati/N. Ky. Apartment Ass'n, Inc. v. Campbell Cty. Fiscal Court, 479 S.W.3d 603 (Ky. 2016), the Kentucky Supreme Court interpreted the authorization of a "fee" under KRS 65.760(3). The Court specifically considered a Campbell County Fiscal Court ordinance levying an annual service charge of $ 45.00 upon each occupied individual residential and commercial unit within Campbell County to fund the county 911 emergency service. Id. at 604.
The Court first found that the ordinance did not violate KRS 91A.510 by imposing a "user fee" that was not based on actual use of the benefit received. Id. at 605-606. The Court explained that KRS 65.760(3) authorizes the imposition of a "fee" generally, that this term is not synonymous with "user fee, " and that nothing in the statute requires the fee to be based on use. Id. Accordingly, the Campbell County ordinance levied a simple fee, not an impermissible "user fee. " See id.
The Court noted, however, that its decision "does not mean that the unqualified term 'fee' used in KRS 65.760(3) is unencumbered by reason or restraint." Id. at 606. Rather, the Court held, "Fees authorized by KRS 65.760 must bear some reasonable relationship to the benefit received. " Id. The Court emphasized that "the nexus required to sustain a fee imposed under KRS 65.760(3) need not necessarily be direct." Id. at 607.
The Court then held that the Campbell County fee on occupied individual residential and commercial units satisfied its announced standard. See id. at 606. According to the Court:
Here, the 911 emergency service fee is levied upon occupied residential and commercial properties. In the narrow context of KRS 65.760(3), occupied properties are an exceedingly logical and practical object of the fee revenue authorized by that provision. Common sense dictates that Campbell County residents engaged in either labor or leisure spend a significant amount of their time at residential and commercial properties located within Campbell County. It naturally follows that demand for this 911 emergency telephone service derives significantly from residents' occupation and use of those properties.
Id. (emphasis in original).
In City of Lancaster v. Garrard Cty, 2017 WL 3446983 (Ky. App. Aug. 11, 2017) (unpublished), the Kentucky Court of Appeals applied the standard set forth in Greater Cincinnati/N. Ky. Apartment Ass'n, Inc . to the Garrard County Fiscal Court's imposition of a charge of 25 cents per month on every water meter located in Garrard County. Id. at *1. Under the Garrard County Fiscal Court ordinance, every water company, water association, or other entity operating a water distribution system in Garrard County must collect the fee and remit the amounts collected to the 911 service on a quarterly basis, withholding 2% of the funds as compensation for administration of the fee. Id. Noting that water meters "are usually connected to residential and commercial units[,]" for the reasons articulated in Greater Cincinnati/N. Ky. Apartment Ass'n, Inc. , the Court found "that a reasonable relationship exists between the 25 cents fee per month imposed upon water meters in Garrard County and the benefit of utilizing 911 service." Id. at *3.
With Greater Cincinnati/N. Ky. Apartment Ass'n, Inc. , and City of Lancaster in mind, we turn to Judge-Executive Wood's question regarding applying a "user fee" for 911 services to water customers. We first find that this hypothetical fee is technically not a "user fee, " as it would not be based on actual use of 911 services. 1 It is instead a simple "fee" under KRS 65.760(3). See Greater Cincinnati/N. Ky. Apartment Ass'n, Inc., 479 S.W.3d at 605-606.
Second, like the charge on water meters in City of Lancaster , we find that a fee charged to all water customers in the county, because water customers occupy residential and commercial units, bears a reasonable relationship to the benefits received from a 911 emergency service.
Third, however, we advise that a fee applied generally to all water customers would require PSC approval. Under KRS 278.040(2), the PSC has "exclusive jurisdiction over the regulation of rates and service" of all utilities in the Commonwealth. The General Assembly defines the term "rate," as used in KRS 278.040, to mean:
any individual or joint fare, toll, charge, rental, or other compensation for service rendered or to be rendered by any utility, and any rule, regulation, practice, act, requirement, or privilege in any way relating to such fare, toll, charge, rental, or other compensation , and any schedule or tariff or part of a schedule or tariff thereof[.]"
KRS 278.010(12) (emphasis added). Here, a fee applied to all water customers would constitute a requirement relating to a charge for utility service, and thus would come under the exclusive jurisdiction of the PSC.
In City of Lancaster , the Court of Appeals did not address or reference the PSC. Thus, a charge applied to every water meter, in contrast to a fee added to every water customer's bill for water service, may not require PSC approval. This is perhaps because a charge applied to every water meter is akin to a special tax on property. 2
In sum, we advise that the Grant County Fiscal Court may establish and operate an emergency service and may obtain funds via special tax, license, or fee to do so. 3 However, we further advise that applying a fee for a 911 emergency service to' water customers would require PSC approval. In contrast, a fee charged to each and every water meter in the county may not require such approval.
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