Request By:
Elmer Cunnagin, Jr., Esq.
Laurel County Attorney
Laurel County Courthouse
London, Kentucky 40741
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question concerning the fiscal court's support of local fire departments. Fire protection in the county is provided by one fire protection district and six volunteer fire departments organized as nonprofit corporations. These fire departments have formed an alliance, a nonprofit corporation, to encourage and develop cooperation among the departments.
This alliance is requesting the fiscal court to place a tax on fire insurance premiums within the county but outside the city limits for the purpose of generating income for fire protection purposes. The alliance wants the tax to be paid to the sheriff, delivered by him to the alliance and then distributed by the alliance to the local fire departments.
Your question is whether the fiscal court may pay lump sums of money from either a tax on fire insurance premiums or the general budget to a nonprofit corporation such as the alliance for distribution by the alliance to local fire departments in the county. Presently the fiscal court supports the fire departments by allowing a certain amount to each department in each budget year and the departments submit invoices for expenses to the county which are subsequently paid individually by the county.
A volunteer fire department is, generally, an independent organization disassociated from the county that is in some instances established as a separate corporate entity. It is not under the jurisdiction of the county government except insofar as contractual agreements are concerned. KRS 75.050 authorizes a county to enter into a contract with a volunteer fire department for fire protection services. However, while a fiscal court is authorized to contract with a volunteer fire department for fire protection services, there is no authority for the county to simply donate public funds to a private corporation. See OAG 78-122, copy enclosed.
A fire protection district organized pursuant to KRS Chapter 75 is also authorized under KRS 75.050 to contract with a county for fire protection services. Furthermore, a fire protection district, under KRS 75.040, has the authority through its board of trustees to levy a tax upon the property in its district in connection with the establishment, maintenance and operation of its fire department. Again, we are unaware of any authority permitting a fiscal court to simply donate funds to a fire protection district.
Not only is there no statutory authority enabling the fiscal court to simply donate public funds to a volunteer fire department or a fire protection district but such a donation would probably violate Section 179 of the Kentucky Constitution. That section prohibits the General Assembly from authorizing a county to lend its credit or appropriate money to any corporation, association or individual, with certain exceptions not applicable in this instance.
KRS 92.285 authorizes cities or an urban-county government to impose and collect license fees or taxes upon insurance companies for the privilege of engaging in the business of insurance. Subsection (2) of that statute deals with a license fee or tax imposed by a city or an urban-county government upon any fire insurance company. The license fee or tax shall be based upon a percentage of the premiums received by the company within the preceding calendar year for insurance on property located within the corporate limits of the city or urban-county government. The statute, however, does not authorize counties to impose and collect license fees or taxes upon insurance companies and therefore it cannot be utilized by county governments. See OAG 79-301, copy enclosed, at page four.
The county does have the authority to levy a license or occupational tax for general revenue purposes or for any specific county governmental purpose authorized by statute pursuant to KRS 67.083(2). See OAG 79-385, copy enclosed, at page two. A county license or occupational tax on insurance companies pursuant to that statute would be constitutional, provided that the license or occupational tax as applied to insurance companies is fairly and equitably integrated with a county occupational or license tax applying to occupations, trades and professions generally. Again, see OAG 79-385.
In conclusion, the county cannot utilize the provisions of KRS 92.285 to levy and collect a license fee or tax against insurance companies based upon a percentage of the premiums received by the company. While the county may levy a license or occupational tax pursuant to KRS 67.083(2), such a license or tax on insurance companies must be fairly and equitably integrated with a county occupational or license tax applying to occupations, trades and professions generally. A county may contract for fire protection services with a fire protection district and volunteer fire departments but it cannot simply donate public funds to such fire-fighting organizations regardless of whether the money comes from a budget appropriation or, specifically, from an occupational or license tax applying to occupations, trades and professions generally.