Request By:
Mr. Robert H. Allphin
Commissioner
Department of Revenue
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Reference is made to OAG 80-351, relating to the funding of the PVA's operations by counties, cities, and urban county government. You have residual questions concerning the placing of that local money into the state treasury and the exacting of fiscal controls in connection with its disbursement.
At the outset, it is necessary that we review the major conclusions of that opinion.
OAG 80-351
The basic conclusions are as follows:
1. The PVA is funded by three sources (state, county, city), each according to a specific statutory formula.
2. The PVA and his deputies are state officers. The PVA employees are state employees.
3. The local money appropriated for use by the PVA is state money.
4. We arrived at no conclusion as to the "mandatory" transfer of the local funds to the state treasury. We merely said that such money is in the "constructive possession" of the state treasury.
5. The PVA is subject to the regulation and supervision of the Department of Revenue. See KRS Chapters 44 and 45.
6. The local money unexpended at the end of a fiscal year does not lapse.
The question here is how is the local money to be fed into the state system, and under what circumstances is it to be expended?
The city is literally required to annually appropriate and pay over its contribution to the "Office of the PVA". KRS 132.285. The county is required literally to annually appropriate and pay each fiscal year to the "Office of the PVA" the total formula contribution. KRS 132.590(7).
However, after the appropriation by the county under subsection 7, subsection 9 of the statute requires the PVA as follows:
". . . the property valuation administrator shall file a claim with the county for that amount of the appropriation specified in his approved budget for compensation of deputies and assistants, including employer's shares of FICA and state retirement, for the fiscal year. The amount so requested shall be paid by the county into the state treasury and shall be expended by the department of revenue only for compensation of approved deputies and assistants and the employer's share of FICA and state retirement in the appropriating county." (Emphasis added)
Regarding all other expenses (non-personnel) of his office, the statute continues as follows:
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"Each property valuation administrator shall at the end of each month file a claim with the fiscal court for expenses of his office other than personnel incurred during the month which are payable from county funds. The court shall order payment made provided the total of all claims filed with the court does not exceed the total sum available under this section." (Emphasis added)
The urban county government contribution procedure is the same as for the county. KRS 132.635.
As we have mentioned in previous opinions, Chapter 132 leaves much to be desired as to the guidance given for the operation of a PVA office. However, as pointed out by the Court in City of Bowling Green v. Board of Education, 443 S.W.2d 243 (Ky. 1969), an established rule of statutory construction requires that seemingly conflicting statutes should be considered together and harmonized, if possible, so as to give proper effect and meaning to each of them. In applying this rule to KRS Chapter 132, it appears that the options available to the Department of Revenue vary according to the source of money involved and the purpose for which it is to be expended.
CITY MONEY
Relating to the city money, it is our opinion that the Department of Revenue has two options. The statute requires the city to pay this money to the office of the PVA. The Revenue Department could require the PVA to place said money in a special official account in a locally selected depository, which cannot be commingled with other funds. The Department could require the cities to submit a monthly report covering balances and expenditures and to post fiduciary bonds covering the gross amounts handled. The Department could require the city to isolate the PVA money in its annual budget. All cities are now required to operate under an annual budget, and to enact a budget ordinance. See KRS 91A.030. All cities are required to keep adequate accounting records and render financial reports to determine compliance with statutes. KRS 91A.020. Each city must, as soon as practicable, cause each fund of the city to be audited by the Auditor of Public Accounts. KRS 91A.040. All city funds shall be disbursed by written authorization approved by the executive authority, which shall state the name of the person to whom funds are payable, the purpose of the payment and the fund out of which the funds are payable. Each authorization shall be numbered and recorded. KRS 91A.060.
The other option for you is that the Department of Revenue could require all city appropriations be paid into the state treasury on a quarterly or lump sum basis, subject to necessary and reasonably imposed departmental fiscal regulations relating to disbursement, including informational reports and records for the local governments. The Department of Revenue would be held accountable to the Auditor of Public Accounts for all receipts and expenditures of such local contributions. See KRS 43.050 and 43.070. In addition, at the end of each year, the Department of Revenue will address the question of a carry-forward of such funds or the return of the funds, as directed by the statutes. The Department may require each PVA to develop a budget, after considering all three sources of available funds for each fiscal year.
The second option just described is subject to the premise that the state depository approach must be able to accommodate the normal time scheme for payment to the local recipients. To fail to do that would, we think, violate the spirit and the letter of the statutes. See KRS 131.030(1), 131.130(1) and 131.140(2).
COUNTY MONEY
Relating to county money, it is our opinion that the statutes are specific as to how money is handled. As set forth in KRS 132.590(9), supra, the county money appropriated to the PVA for personnel expenses must be paid into the state treasury to be expended by the Department of Revenue only for personnel purposes. Likewise, pursuant to this same statute, non-personnel expenses shall remain in the county treasury with the PVA filing a claim with the fiscal court at the end of each month for these non-personnel expenses of his office which were incurred during that month. However, this money is subject to appropriate fiscal controls, which must take into consideration the necessary time scheme in paying the PVA expenses as they normally accrue. The Department of Revenue can issue guidelines to the PVA as to allowable and unallowable expenditures under KRS 132.590. The county treasury is already under controls. The fiscal court must provide a budget item in its budget which reflects the appropriation for the PVA. KRS 68.240, et seq. Then, when the PVA disbursement claims are presented to fiscal court, that body must enter an order approving such proper claims for disbursement. KRS 67.080(1)(c). The Department of Revenue may require the counties to submit monthly reports reflecting the appropriations balances and expenditures made therefrom. CF. KRS 68.360.
We hope the above will be helpful to you in determining a proper course of action.