Request By:
Mr. Donald R. Erler
Assistant County Attorney
1129 Kentucky Home Life Building
Louisville, Kentucky 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The public service program legislation of 1974 is the area of your inquiry. See KRS 68.510 through 68.550.
Question No. 1: Where a public service program is submitted to the electorate, does this cover voters residing in the incorporated and unincorporated areas?
KRS 68.520(2) and (3) and KRS 68.530(1) use the phrase "to the electorate of such county." (Emphasis added). Subsection (2) of KRS 68.530 employs the expression "to the voters of the county." (Emphasis added). The totality of this language literally suggests that such questions must be submitted to the voters in all portions of the county, i.e., voters in the unincorporated and incorporated areas of the county. Where a statute is unambiguous, as is the case here, the courts have a duty to give effect to the statute according to its literal language.
Department of Revenue v. Greyhound Corp., Ky., 321 S.W.2d 60 (1959); and
Hilliard v. U.S. (C.C.A. -6, 1962) 310 F.2d 631. Moreover, the literal interpretation makes sense, since the voters are voting on imposing a county ad valorem or license tax on all citizens of the county, pursuant to §§ 171 and 181 of the Kentucky Constitution, as implemented by KRS 67.083 [Home Rule statute] and the subject statutes. If a county tax were to be submitted to only residents of the unincorporated area, for example, it would be unconstitutional, for if the tax is to be imposed upon all county citizens, all such citizens entitled to vote must be given an opportunity to express their desires in the matter. See § 59, Kentucky Constitution. Such a county ordinance providing that only a portion of the county voters could vote on a county tax would violate § 59, as being special legislation and lacking in a reasonable classification. Cf.
Hallahan v. Mittlebeeler, Ky., 373 S.W.2d 726 (1964).
Further, if a county-wide tax, and that is what KRS 68.510 envisions, were to be voted on only by a designated portion of the county, such ordinance would be arbitrary under § 2, Kentucky Constitution. It would also violate the due process and equal protection clauses of the fourteenth amendment of the Federal Constitution. In addition, such an ordinance, providing that only the people in the unincorporated areas of the county could vote on a county-wide tax, would be in obvious conflict with KRS 68.510 et seq. See
Louisville & Nashville R. Co. v. Commonwealth, Ky., 488 S.W.2d 329 (1972).
Question No. 2: Must the tax be imposed uniformly on all property owners or income earners working in the county? The answer is "yes". Our reasons are given in the answer to question no. 1. Section 171 of the Kentucky Constitution requires that taxes must be levied and collected uniformly on all property of the same class subject to taxation within the territorial limits of the authority levying the tax. The imposition of a license or occupational tax under § 181, Constitution, requires uniformity in its application. See
City of Louisville v. Koehler, Ky., 264 S.W.2d 80 (1954) 84, concerning the doctrine of equality and uniformity in taxation.
Question No. 3: Could the voted occupational license tax be imposed on nonresidents who earn their income in Jefferson County?
The occupational license tax, permitted under § 181, Constitution, may be constitutionally imposed upon nonresidents who earn their income in Jefferson County, since the tax is imposed on the right or privilege of carrying on a business, vocation, trade or calling within
Jefferson County. City of Louisville v. Sebree, Ky., 308 Ky. 420, 214 S.W.2d 248 (1948); and
Kohler v. Benckart, Ky., 252 S.W.2d 854 (1952). Here the subjects of classification, i.e., residents and nonresidents of Jefferson County who earn an income within Jefferson County, are founded on a natural and reasonable basis, with a logical relation to the purposes of such an ordinance, and do not offend the principle of equality and uniformity, since the tax operates equally upon all those within the class [those earning money in Jefferson County].
City of Louisville v. Sebree, Ky., 214 S.W.2d 248, above.
Next, you ask if nonresidents who work in Jefferson County could be legally exempted from the occupational license tax imposed by the county. We doubt that such an exemption would be upheld by the courts, since the classification on its face seems unreasonable, considering that the common thread of earning money in Jefferson County applies to residents and nonresidents working in Jefferson County alike. Such an exemption would offend the law of equality and uniformity. See § 171, Constitution. Also the fact that there are greater benefits bestowed on some employees in the taxing district than on others is not important. See
Ratliff v. Lexington-Fayette Ur. Cty. Govt., Ky., 540 S.W.2d 8 (1976) 9, 10. In devising a classification for exempting a class from taxes, the taxing authority "may make distinctions of degree having a rational basis, and when subjected to judicial scrutiny they must be presumed to rest on that basis if there is any conceivable state of facts which would support it."
Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S. Ct. 868, 81 L. Ed. 1245 (1937). While the tax authority is not required to tax every member of a class or none, the exemption must rest upon a logical basis. Here the residents and nonresidents working in Jefferson County belong to the same class [both earn money in Jefferson County], and we are hard put to see how a valid distinction could be based upon the sheer fact of nonresidency. Exempting the nonresidents who earn money in Jefferson County would be discriminatory and unconstitutional.
Finally, Justice Reed, in Madden v. Kentucky, 309 U.S. 83, 84 L. Ed. 590 (1939), pointed out that state legislatures possess the greatest freedom in classification in the field of taxation. He wrote that since the members of a legislature necessarily enjoy a familiarity with local conditions which the Supreme Court could not have, "the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppresive discrimination against particular persons and classes. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it." Justice Reed added that "traditionally classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden." (Emphasis added).