Request By:
Mr. Ed Radjunas, Vice-Chairman
Ashland Board of Education
Ashland Community College
1400 College Drive
Ashland, Kentucky 41101
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General;
In your recent letter to the Attorney General, it is stated that Senate Bill 277 passed by the 1976 General Assembly amending KRS 132.280 provides that independent school districts who would not have been penalized as of January 1, 1975, will use the county assessment made for state purposes as the basis for levying ad valorem property taxes. As a result of this bill Ashland Independent School District will be required to use the Boyd County assessment July 1, 1977.
Several factors have come into existence since the January 1, 1975 assessment that could bring about a loss of revenue for the Ashland Independent School District if the county assessment is used as a basis for collecting ad valorem property taxes. One factor is a recent effort by the residents of Ashland to substantially increase assessments in the city. Another factor is a lawsuit won by Mr. Harold Kelley. Mr. Kelley contended in his suit against the City of Ashland that the tax assessments were too low on most properties and should be increased. As a result of this action the City of Ashland has hired a General Appraisal Company to assess all property at its fair market value.
It is your contention that Senate Bill 277 could cause the Ashland Independent School District to suffer a loss in the excess of $500,000 of revenue per year.
Four questions are asked which will be answered in the order in which they were raised:
(1) What was the basis for Senate Bill 277?
Answer: It was to provide a common basis for raising revenue for financing primary and secondary education in the Commonwealth and to eliminate variations in assessment in school districts.
(2) How can such law be written as to protect some districts and not others?
Answer: We are advised that there are some eight independent school districts in the state still using city assessments. On the theory that there might be one or more who could suffer some reduction in revenue by use of the state assessment, the General Assembly added the noted exception. There is no question that the General Assembly acted within its constitutional powers in requiring use of the assessment by all school districts.
(3) Can the independent district afford the loss of revenue while the county is "catching up"?
Answer: It would appear that the question of potential revenue loss to the Ashland Independent School District is purely speculative. Substantial increases in property assessments are easier accomplished on paper than in practice. We are advised by the Department of Revenue that the assessment of real property is approximately 17% or $27,000,000 higher than the city assessment. The tangible personalty assessment is higher by $8,000,000 or about the same percentage. A $62,000,000 increase in the city assessment or more than 33 1/3% would be required to produce the potential loss to which you refer.
(4) If the intent of the law was to help, not hinder, would civil proceedings based on arbitrary legislation be feasible?
Answer: Since, as pointed out above, the act of the General Assembly was to require a county assessment for the purpose of obtaining revenue for school purposes, any civil proceedings based on the assumption that the legislation is arbitrary would be of doubtful validity.
If you have any questions concerning the figures cited in this letter, we suggest you contact Mr. Paul Tanner, Director, Research Staff, Department of Revenue.