Request By:
Ms. Sylvia Watson
County Commissioner
Office of County Commissioners
Jefferson County Courthouse
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; Joseph R. Johnson, Assistant Attorney General
In your letter dated October 1, 1980, you asked the Attorney General the following question:
In your opinion is it possible for Jefferson County to establish two separate tax rates, one for real property and another for personal property, and still comply with House Bill 44?
As will be discussed below, the answer to your question is yes.
KRS 68.245(1) provides that no county fiscal court shall levy a tax rate for a succeeding fiscal year which will produce more revenue than had been produced in the preceding fiscal year. Net assessment growth is excluded. KRS 68.245(3) provides that the state local finance officer shall certify to each county judge/executive by June 30 of each year the following:
(1) The tax rate that a fiscal court could levy under the provisions of KRS 68.245(1) and the amount of revenue expected to be produced by it;
(2) The compensating tax rate and the amount of revenue expected to be produced by it; and
(3) The tax rate which will produce no more revenue from real property, exclusive of revenue from new property, than four percent (4%) over the amount of revenue produced by the compensating tax rate, and the amount of revenue expected to be produced by it.
If the county fiscal court proposes to levy a tax rate which will produce up to four percent (4%) more revenue for a succeeding year than had been produced in a previous year a public hearing must be held. However, if the four percent (4%) ceiling is breached, KRS 68.245(6)(b) comes into play:
The county fiscal court shall, within seven (7) days following adoption of an ordinance, order, resolution, or motion to levy a tax rate, . . . which will produce revenue from realproperty, exclusive of revenue from new property as defined in KRS 132.010, more than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010, cause to be published, in a newspaper of largest circulation in the county, a display type advertisement of not less than twelve (12) column inches the following:
(1) The fact that the county fiscal court has adopted such a rate;
(2) The fact that the part of the rate which will produce revenue from realproperty, exclusive of new property as defined in KRS 132.010, in excess of four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 is subject to recall; and
(3) The name, address and telephone number of the county clerk, with a notation to the effect that that official can provide the necessary information about the petition required to initiate recall of the tax rate. (Emphasis added).
The above-quoted statute makes two references to real property.
(1) The fiscal court must within seven (7) days following adoption of the tax rate which will produce revenue from real property more than four percent (4%) over the amount of revenue produced by the compensating tax rate advertise the rate in a newspaper; and
(2) The county fiscal court must also advertise that such portion of the tax rate which will produce revenue from real property exceeding the four percent (4%) ceiling is subject to recall. There is no reference to personal property -- only real property.
Also referring to KRS 68.245(5)(c) we find that in those instances in which a public hearing must be called prior to the fiscal court setting a tax rate which will exceed the compensating tax rate, the hearing must be advertised twice in a newspaper of largest circulation in the county in two (2) consecutive weeks. The following information must be included in the hearing notice:
(1) The compensating tax rate and the revenue expected from it;
(2) The revenue expected from new and personal property.
Therefore, the revenue to be produced by the compensating tax rate and the revenue to be produced from new and personal property are two (2) separate and distinct items to be listed in the public hearing notice.
Were we to apply the statutory construction doctrine of expressio unius est exclusio alterius to KRS 68.245, we would conclude that had the General Assembly intended to include personal property tax rates along with real property tax rates within House Bill 44 constraints, the statute would have specifically so provided. However, as demonstrated above, KRS 68.245 specifically refers to real property rates only as being subject to the House Bill 44 recall provision. The absence of the term "personal property" from this provision implies its deliberate exclusion. Bloemer v. Turner, 281 Ky. 832, 137 S.W.2d 387 (1940).
It is also useful to refer to Section 171 of the Kentucky Constitution. This section clearly contemplates the possibility of two (2) separate tax rates for personal and real property by making subject to referendum any act of the General Assembly whereby a lower tax rate on personal property than on real property is made possible.
In addition, we find further enlightenment in ascertaining legislative intent by referring to the definition of "compensating tax rate. " As shown above, the state local finance officer must certify to each county judge/executive by June 30 of each year the tax rate which will produce no more revenue from real property than four percent (4%) over the amount of revenue produced by the compensating tax rate. If the fiscal court should levy a tax rate more than four percent (4%) over the amount of revenue produced by the compensating tax rate from real property, the tax rate is subject to recall.
The term "compensating tax rate" is defined in KRS 132.010 in relevant part as follows:
'Compensating tax rate' means that rate which, rounded to the next higher one-tenth of one cent per one hundred dollars of assessed value and applied to the current year's assessment of the property subject to taxation by a taxing district, excluding new property and personalproperty, produces an amount of revenue approximately equal to that produced in the preceding year from real property. . . . (Emphasis added).
The very definition of "compensating tax rate" evidences a legislative intent that only revenue from real property comes within House Bill 44 limitations. Personal property and new property are specifically excluded from the definition of "compensating tax rate. " There is a clear and unambiguous intent on the part of the General Assembly to exclude personal property from House Bill 44 limitations and there is no room for statutory construction. Fryman v. Electric Steam Radiator Corporation, Ky., 277 S.W.2d 25 (1955).
Because the clear and unambiguous intent of the General Assembly was to place a ceiling upon real property tax rates while specifically exempting personal property tax rates, the unavoidable conclusion is that the county fiscal court may establish two separate tax rates -- one for real property and one for personal property. This was the position taken by this office in OAG 60-807 in which we concluded that there was no statutory or constitutional prohibition against a city levying a tax rate on personal property which is different from the tax rate on real property.