Request By:
Mr. James S. Secrest
Allen County Attorney
City-County Building
P.O. Box 35
Scottsville, Kentucky 42164
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You raise a question about KRS 65.710(5), which provides that no contract relating to ambulance service shall be made for a period of time greater than one (1) year. The city of Scottsville and Allen County propose to let a contract for ambulance service [emergency medical services] to two private firms. Referring to KRS 65.710(5) [1 year limitation], you ask: "Does this mean that the city and county will have to advertise for bids every year? If so, is there anyway to get around advertising each year?"
A franchise of this kind must be let out on bids pursuant to § 164, Kentucky Constitution. The franchise term cannot exceed twenty years.
Ray v. City of Owensboro, Ky., 415 S.W.2d 77 (1967) 80.
As for KRS 65.710(5) and the one year contract limitation, the legislature undoubtedly had in mind the fact that an ambulance franchise would probably in many instances entail government subsidy. Thus if the particular franchise in question will involve expenditures out of the county and city treasuries each year, then § 157 of the Kentucky Constitution comes into play. That section provides that no county or city shall be authorized to become indebted in any manner or for any purpose to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of two-thirds of the voters thereof, voting at an election to be held for that purpose.
The answer to your question is that if the proposed franchise involves a financial obligation of the city and county which would, when the proposed term is considered in the aggregate, exceed the available revenue and income of these governments for the year of execution, the franchise could not be legal unless the people vote for the obligation. Also see § 158 of the Constitution, imposing absolute debt restrictions. In other words a county or city debt must run concurrently with the current revenues, in the absence of a validating vote of the people at an election held for that purpose. See
Kenton County Fiscal Court v. Richards, 291 Ky. 132, 163 S.W.2d 302 (1942) 303, in which the court held that where the county contracted to pay rentals, in connection with an airport acquisition, for 20 years, such contract pledged the faith and credit of the county for payment of aggregate rentals, which violated § 157 of the Constitution.
Thus, unless the fiscal court wants the issue submitted to the voters, if you find that the aggregate financial commitment of the governments would exceed current revenues, the city and county will have to fall back on the one year contract or franchise as suggested by KRS 65.710(5), assuming that the one year obligation of the governments could fall within available current revenues.
If you want to avoid the one year franchise device and attending bid procedure, and assuming current revenues would not be sufficient to absorb a long term franchise commitment, then the governments could submit the question to the voters.
It is our opinion that where §§ 157 and 158 of the Constitution are being observed, a county or city can grant a franchise for longer than one year, not to exceed 20 years, since this constitutional prerogative of § 164 cannot be lessened or cut back by the legislature so long as other pertinent constitutional provisions are being complied with.
Next, you say that the proposed franchise would not limit competition, but would only grant a franchise to two funeral homes. You ask whether, under those circumstances, bidding would be necessary. The governments do not have to issue an exclusive franchise.