Request By:
Mr. Ed Burtner
Big Sandy Area Development District
130 North Lake Drive
Prestonburg, Kentucky 41653
Opinion
Opinion By: Robert F. Stephens, Attorney General; Rickie L. Pearson, Assistant Attorney General
Re: Public Service Corporation Property Tax
In your February 1, 1978, letter, you requested a formal opinion. The question presented in that letter was, "Whether Ohio-Kentucky Utilities, Inc. is liable for payment of the Public Service Corporation property tax under KRS 136.115 - 136.180, to the City of Wayland, Kentucky?"
This Office is of the official opinion that Ohio-Kentucky Utilities, Inc., is liable for the payment of Public Service Corporation property taxes under KRS 136.115 - 136.180 to the City of Wayland, Kentucky.
First of all, it must be noted that there exists no provisions under our Constitution or statutes which exempt utility companies from the payment of the tax in question to cities.
Pursuant to KRS 136.120, Public service corporation property tax; classification; assessment; certification, it is provided in subsection 1, inter alia:
"Every . . . gas company, . . . electric light company, electric power company and every other like company or business performing any public service shall annually pay a tax on its operating property to the state and to the extent such property is liable to taxation shall pay a local tax thereon to the county, incorporated city, and taxing district in which its operating property is located." (Emphasis added.)
The above-cited statutory provision expressly imposes a Public Service Corporation Property tax upon gas companies. Furthermore, such gas companies are subject to taxation by the incorporated cities in which its operating property is located.
It is also expressly provided in subsection 2 of KRS 136.120 that, in essence, the operating property and nonoperating tangible property of gas companies (a taxpayer within the meaning of the statute) shall be subject to both state and local taxes at the same rate as the tangible property of other taxpayers not performing public services.
However, subsection 2 and its exception, that nonoperating intangible property is subject to taxation for state purposes only, does not destroy the taxing power of a city. The exception does not affect the cities because the state expressly reserved the power to tax nonoperating intangible property, a power exclusive to the Commonwealth.
Once the property in question has been classified as operating property or operating tangible property (see KRS 133.115(2), nonoperating tangible property (see KRS 136.120(2), and nonoperating intangible property (see KRS 136.120(2), the department of revenue has the sole power to value and assess all of the property of the corporation or company, KRS 136.120(3).
After the department of revenue has classified, valued, and assessed all of the property, it then allocates the assessed property and certifies the operating property or operating tangible property and nonoperating property to the counties, cities, and taxing districts. When the property is certified, it is done so to the county clerk of each county in which any of the operating property or nonoperating tangible property is located. The certification of the property to the county clerk contains the amount of tax for which the taxpayer is liable to the county, city, or taxing district. Thereafter, the county clerk files the certificate in his office and then certifies it to the proper collecting officer of the county, city, or taxing district for collection, KRS 136.180.
In conclusion, it must be stated that where both the state and the city have the right and power to tax the operating property and/or the nonoperating tangible property, the imposition of the tax is not double taxation. In Second St. Properties, Inc. v. Fiscal Court of Jefferson County, Ky., 445 S.W.2d 709, 715 (1969), Kentucky's highest court set forth the standard for "double taxation. " The Court stated:
"To constitute double taxation the two taxes must be imposed on the same property by the same governing body during the same taxing period for the same taxing purpose. Fox v. Board for Louisville & Jefferson County Children's Home, 244 Ky. 1, 50 S.W.2d 67 (1932). The tax under consideration does not have a single one of these elements, much less all of them.
"The second answer is that there is no constitutional prohibition against double taxation. City of Louisville v. Aetna Fire Ins. Co., 284 Ky. 154, 143 S.W.2d 1074 (1940); Kupper v. Fiscal Court of Jefferson County, Ky., 346 S.W.2d 766 (1961). We have held such a tax is contrary to public policy in the absence of a clear legislative intent to impose it. City of Louisville v. Aetna Fire Ins. Co., 284 Ky. 154, 143 S.W.2d 1074 (1940). But here, assuming this to be a double tax (which it is not), the legislature has sanctioned its imposition." (Emphasis added.)
As to the problem at hand, seeing that there are two taxing entities or governing bodies involved, the tax in question is not a "double tax."