Request By:
Mr. James S. Secrest
Allen County Attorney
Box 35
Scottsville, Kentucky 42164
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan Assistant Deputy Attorney General
The Allen County War Memorial Hospital is a county hospital created pursuant to KRS 216.010, et seq. , and was constructed with a Hill-Burton Grant and a voted bond issue. We pointed out in previous opinions that the fiscal court, as long as it is operated as a county hospital, must maintain overall control of such county hospital. The hospital, up to now, has been operated from patient revenue and revenue sharing appropriations from fiscal court. No special tax has ever been levied to maintain or operate the hospital.
You ask whether the fiscal court can levy a hospital tax for operational purposes without following the provisions of KRS 216.310 et seq. [hospital districts].
KRS 216.050 reads: 1
"The fiscal court shall levy a tax sufficient to maintain the hospital after its erection and equipment and to pay the current expenses and necessary repairs and additions thereto, and to pay the interest on the bonded indebtedness and establish a sinking fund for retirement of the bonds at maturity. The sum derived from the tax shall be applied to the purposes provided in this section."
Such a tax as described in KRS 216.050 n2 is subject to the rollback law, KRS 68.245. If the county rate under rollback is insufficient to accomodate a special tax to run the hospital [operational and maintenance costs] as mentioned in KRS 216.050, then the county could consider establishing a hospital district under KRS 216.310 et seq. Such a hospital district is a special taxing district under § 157, Kentucky Constitution, and the hospital district tax rate is entirely separate from the county tax ad valorem rate. See KRS 216.317.
2
Next, you ask whether fiscal court can lease the hospital to a private corporation for the purpose of operating the hospital.
In
Abernathy v. City of Irvine, Ky., 355 S.W.2d 159 (1962), the court wrote at page 161 that "The statutes do not demand that a county or city maintain a hospital as a function of government; they merely require that if a hospital is maintained as a governmental institution it be controlled and managed by public officials." In simple words, if this hospital is to be run as a "county governmental hospital", the fiscal court cannot delegate or contract away its responsibility to exert overall control over the county hospital. See KRS 216.040. 3 The court said emphatically in
Booth v. City of Owensboro, 274 Ky. 325, 118 S.W.2d 684 (1938) 686, that a city or county, in operating a city-county hospital, has no authority to take a private corporation or individuals into a partnership in conducting such public enterpri e. "To do so is to surrender official responsibility and to delegate the public function to persons who are not responsible to the people." (Emphasis added).
In addition, if the bond issue documents and contracts provided that the hospital would be run through a county hospital board, the county is bound on such agreement until the bonds are fully paid.
Keathley v. Town of Martin, Ky., 253 S.W.2d 3 (1952) 5. Any federal conditions imposed upon the county would have to be observed in connection with original financing.
Both the Federal and Kentucky Constitutions prohibit the use of a statute to impair the obligations of contract. See Article I, § 10, Constitution of the United States and § 19, Kentucky Constitution. These sections are really the underpinning in the above principle of observing contracts as held in Keathley, above.
Footnotes
Footnotes
1 KRS 216.010 to 216.070 was repealed by Acts 1978 ch. 118 § 19, effective June 17, 1978.
2 See KRS 67.083(3)(d), empowering fiscal court to deal with establishment and operation of county hospitals by ordinance, etc.
3 Now KRS 67.083(3)(d).