Request By:
Hon. Charles J. McEnroe
203 West Columbia Street
Post Office Drawer 10
Somerset, Kentucky 42501
Opinion
Opinion By: Steven L. Beshear, Attorney General; Joseph R. Johnson, Assistant Attorney General
In your letter dated October 7, 1980, you asked the Attorney General whether the City of Burnside can collect more than four percent (4%) revenue in 1980 than in 1979 and still comply with House Bill 44 when the increase in revenue has resulted from increased property assessments instead of an increased tax rate. For the following reasons, the answer to your question is no.
KRS 132.027(1) provides that no city shall levy a tax rate for 1979-80 which will produce more revenue than would be produced by application of the maximum tax rate that could have been levied in 1978-79 to the 1978-79 assessment. In each succeeding year, no city can levy a tax rate which will produce more revenue than would be produced by application of the tax rate that was levied in the preceding year to the preceding year's assessment. Net assessment growth is excluded as is new property.
If the city governing body proposes to levy a tax rate which exceeds the compensating tax rate as defined in KRS 132.010(6) a public hearing is required; however, if the four percent (4%) ceiling is breached, such portion of the tax rate which produces more than four percent (4%) revenue in the succeeding year than had been produced in the preceding year is subject to a possible recall vote.
Therefore, the focus here is not on the tax rate per se but on the amount of revenue to be produced by application of that tax rate. If the city governing body proposes to impose the same tax rate for the succeeding year as the preceding year but due to increased assessments more than four percent (4%) revenue is produced in the succeeding year than had been produced in the preceding year, that portion of the tax rate which causes a breach in the four percent (4%) ceiling is subject to recall. If the local governing body desires to avoid a possible recall vote, the tax rate must be rolled back in order to avoid collecting more than four percent (4%) revenue in the succeeding year than had been produced in the preceding year. This is true even if it means the tax rate must be decreased for the succeeding year.
We hasten to add that House Bill 44 limitations apply to revenue produced from real property only -- not personal property. A copy of OAG 80-545 is enclosed.