Request By:
Mr. Bobby K. True
Trimble County Attorney
Main Street
Bedford, Kentucky 40006
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The ultimate question you raise is whether the agricultural extension district is a separate taxing district under § 157 of the Kentucky Constitution. Your immediate question is whether a county, already at the maximum rate under KRS 68.245 [roll-back law], can legally levy an extension district tax in the absence of a special voted tax.
It is significant to note that 60 counties in Kentucky have established the extension district.
Your letter concerns the Cooperative Extension Service District authorized by KRS 164.620, whose boundaries are coexistent with county boundaries. Such a district is a "governmental subdivision of the Commonwealth and a public body corporate." (Emphasis added). KRS 164.620. The district's business is managed by the Extension District Board. KRS 164.655. The purpose of the district is to aid in the dissemination of agricultural practices and education throughout the state. KRS 164.610. In connection with its powers the board is to serve as an agency of the Commonwealth, to manage and transact all of the business and affairs of its district, and to have authority to acquire property necessary for the conduct of the business of the district for the purposes mentioned. It has the power to collect the district taxes and expend such funds for the exclusive work of the district. In other words, the district, through the board, has fiscal and administrative powers entirely independent of the county. As we said, the purpose of the district is to provide aid and assistance to the people of the district, which is coextensive with the county, in the fields of agriculture, economics, and rural and community life, through extension work to be carried on in conjunction and cooperation with the College of Agriculture of the University of Kentucky and the U.S. Department of Agriculture.
The extension district thus performs a unique governmental service in the field of education, which could not otherwise be performed properly by the county or other political subdivision.
The board is charged with formulating an annual district budget to finance the statutory purpose. KRS 164.655(8). Since the authority for the fiscal court's levying the district tax has been repealed [1978 Acts, Ch. 118, § 19, repealing KRS 164.665], the district board, by implication, has the authority to levy the tax. See KRS 164.670.
Section 157 of the Kentucky Constitution establishes, inter alia, maximum tax rates for cities, counties, taxing districts, and other municipalities. The maximum tax rate for counties and taxing districts is fifty cents (50 ) on the hundred dollars. Thus the tax rate restriction applicable to a separate taxing district does not involve the tax rate restriction of the county in which it is located. A separate taxing district, like a county, is a separate taxing entity under the constitution. Of course the limit of tax rate as fixed by § 157 of the Constitution is mandatory and absolute.
Tipton v. City of Shelbyville, 139 Ky. 541, 107 S.W. 810 (1908) 811.
The courts have recognized that under § 157 of the Constitution the General Assembly has the authority to establish separate taxing districts designed to effectuate some governmental purpose or purposes, by way of a general law. In
City of Covington v. District of Highlands, 113 Ky. 612, 68 S.W. 669 (1902) 671, Judge O'Rear wrote that taxing districts may not be created by special acts of the legislature, but general provision for such form of government, to be applied to particular localities, dependent upon a compliance with some general statute is permitted. Here the extension district law is a general statutory treatment. See also
Rash v. Louisville & Jefferson County Met. S. Dist., 309 Ky. 442, 217 S.W.2d 232 (1949), upholding the creation of taxing districts or other municipality.
The key idea here is that KRS 164.620 characterizes the extension district as a "governmental subdivision of the Commonwealth", a public body corporate. (Emphasis added). In that connection the court, in
Commonwealth v. Citizens' Nat'l Bank, 117 Ky. 946, 80 S.W. 158 (1904) 161, stressed that taxes of counties and separate taxing districts are levied or imposed by authority of the state, as "subdivisions of the state." The court said this:
"Taxes levied by counties, cities, towns, and taxing districts are imposed by authority of the state. Counties are but subdivisions of the state, created for governmental purposes. They derive their authority from the state, and can levy no taxes except such as the state authorizes them to levy. "
We are of the opinion that under § 157 of the Constitution the legislature intended to create the extension district as a separate entity of government, a separate "governmental subdivision of the Commonwealth", a separate public body corporate, and this indeed a separate taxing district. The fact that the extension board itself now has the power to levy its own tax buttresses this view. And KRS 164.670 directs that the district tax be due and payable to the duly elected treasurer of the extension board.
Section 157 of the Constitution presupposes a basic autonomy as relates to counties, cities, and taxing districts. Clearly KRS 164.620, 164.655 and 164.670, evidence the intent to create, by way of the extension district, such an autonomous creature, even though the cooperation of the county government is involved. See KRS 67.083(3)(q).
There is no requirement by the courts that the legislature, in order to create a separate taxing district, must employ in the statute the magic words "shall constitute a separate taxing district within the meaning of § 157 of the Constitution." KRS 173.720 provides for establishing a library district with authority to levy a tax for its purposes. However, there is no express statement in the statute that the district constitutes a separate taxing district within the meaning of § 157,
Constitution. Nevertheless, in Boggs v. Reep, Ky., 404 S.W.2d 24 (1966), the court recognized that the library tax is not a part of the county tax [even though fiscal court levies the tax for the district] within the prohibition of § 157, but is a tax levied by a new authorized taxing district created pursuant to statutory authority. A fortiori a stronger case exists here since the extension district board can now levy its own tax.
In construing the county community improvement district in KRS Ch. 107 in
Lowery v. County of Jefferson, Ky., 458 S.W.2d 168 (1970), the court pointed out that if a taxing district is to have the effective power of taxation, separate and apart from county or city taxes, and not chargeable to the rate limit of any city or county, it is plain that the ultimate power to decide whether the tax shall be levied cannot be vested in the governing body of a county or city, for there the purported district is in reality nothing but a subterfuge to evade limits on tax rates. For illustration, Judge Cullen wrote in Lowery, above, that if fiscal court has the sole voice as to whether a particular tax shall be levied upon the taxpayers of the county, it would be pure sophistry to say that the tax is not a county tax. Under the act in Lowery the fiscal court of the county in which the district is created has the power of ultimate decision on every question of any importance, except it cannot refuse to levy a tax to pay general obligation bonds of the county [and except that the people vote on improvement projects]. The fiscal court has veto powers over any project and over all expenditures. Thus the court held that the act did not validly provide for the establishment of a separate, independent taxing district. The purpose of such district under KRS 107.330 is to provide for the acquisition and construction of such buildings as may be needed for any project serving a county purpose by any governmental unit within the district.
The extension district can be carefully distinguished. The extension district board prepares a budget [KRS 164.655] and levies a tax. It is mandatory that fiscal court appropriate the minimum to the district provided in KRS 247.300. Any county board of education appropriations in addition to the county minimum are now permissive under KRS 247.080.
While KRS 164.665 was repealed in 1978, and while that statute imposed certain restrictions by way of the fiscal court's accepting or rejecting the budget of the board and then finally levying an extension district tax, all such restrictions and powers of fiscal court went out with the repealed statute. All or a portion of the extension budget may be financed through the district tax and/or contributions from other sources. Assuming a rational and reasonable budget as proposed by the extension board, with the advice of the extension council, and as consistent with financing policies of the extension service, and which reflects the agricultural, home economics, youth and related subject matter needs of the people of the district, the extension board has the authority to levy such a district tax at a rate necessary, when considering contributions from the county and other sources, to finance the annual budget of the district. Of course the tax rate must be reasonable and cannot exceed the 50 limit of § 157, Constitution. Only the courts can determine whether such budget and tax rate are reasonable in the particular case. See § 2, Kentucky Constitution. Thus the extension district, as a separate taxing district, is independent of the county and its tax rate of 50 cents.
The question about the county's roll-back posture is academic under this analysis.