Request By:
Mr. Vernon Taylor, Sr.
Bell County Sheriff
P.O. Box 336
Pineville, Kentucky 40977
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You request our opinion as to your investing taxes you have collected and other monies received by you, including fees and commissions earned by you.
KRS 134.170, 134.300, 134.320, and 160.510 treat the matter of the sheriff's reporting, within a specified time scheme, and turning over taxes collected as relates to county, state, and school taxes. Those statutes establish a monthly reporting and transfer of tax procedure. In Funk v. Milliken, Ky., 317 S.W.2d 499 (1958), the court established the principle of the local constitutional fee officer making an annual accounting with fiscal court of any excess fees, after the compensation of the officer and that of his deputies, and other necessary expenses have been paid out of the officer's fees.
The statutes, prior to the enactment of H.B. 24 in the 1982 session, did not authorize the investment of such money receipts on the part of the sheriff.
Section 1 of H.B. 24 amends KRS 66.480(2) to provide that sheriffs may, and at the direction of the fiscal court, invest and reinvest money subject to their control and jurisdiction, including tax dollars subject to the provisions of KRS 134.300, 134.320 and 160.510, in the investment instruments permitted by subsection (1) of this section, except that sheriffs in urban county governments shall not invest tax dollars. The investment instruments include obligations of the United States, its agencies and instrumentalities, and by repurchase agreements involving same, reached with national or state banks chartered in Kentucky. Such investments also include bonds or certificates of indebtedness of Kentucky, its agencies and instrumentalities; any savings and loan association insured by an agency of the government of the United States up to the amount so insured; interest-bearing deposits in national or state banks chartered in Kentucky and insured by an agency of the government of the United States up to the amount so insured, and in larger amounts providing such bank shall pledge as security obligations, as permitted by KRS 41.240(2) (collateral securities), having a current quoted market value at least equal to any uninsured deposits. The sheriff cannot make any investment which would jeopardize the tax exempt status of any outstanding obligation of such unit of local government.
Under Section 1 of the bill, the sheriff may delegate the investment authority above provided to the county treasurer, and such officer shall thereafter assume full responsibility for all investment transactions until the delegation of authority terminates or is revoked.
The sheriff must report the earnings of any investments at the time of his annual report and settlement with the fiscal court involving excess fees. This relates only to the sheriff's investment of the fees of his office, not tax monies.
Under the bill the State Local Finance Officer is required to assist the sheriff in the investing of funds coming into his hands which are temporarily in excess of "operating needs". That obviously does not include tax monies collected.
Also under Section 1 of H.B. 24, the State Local Finance Officer may create, and county officials may associate to create, an investment pool for county officials. If county officials create a pool, each group may select a manager to administer their pool and invest the assets. However, the sheriff, for example, shall not invest more than $100,000 in such pool. Investments are limited to those mentioned above. The pools are subject to annual audit. Before investing in an investment pool, the sheriff must allow any savings and loan association or bank in the county, as described in KRS 66. 480(1)(c) and (d), to bid for the deposits at least once in each 6 months period.
Under Section 2 of the bill, KRS 134.140 is amended to provide that the sheriff, except in urban-county governments, may, and at the direction of fiscal court, invest any tax revenues in his possession, relating to any investments mentioned above, from the time of collection until the time of distribution to the proper taxing authorities pursuant to KRS 134.300, 134.320 and 160.510. At the time of the sheriff's monthly distribution of taxes to the district board of education, he must pay to the board that part of his investment earnings for the month which is attributable to the investment of school taxes, but that shall not be construed as prohibiting the sheriff from obtaining his expenses not to exceed 4% of the earned monthly investment income for the administration of this investment fund.
In those counties where the sheriff pays his fees and commissions to the county and salaries and expenses of his office are paid by the county, the sheriff must pay the county treasurer the investment earnings, other than those paid the board of education, at the time of his monthly distribution of taxes to the county.
In those counties where the office of sheriff is funded in whole or in part by fees and commissions, the sheriff may use investment earnings, other than those which must be paid to the board of education, to pay lawful expenses of his office, and the remainder shall be paid to the fiscal court at the time of the sheriff's annual settlement for county and district taxes and excess fees.
SUMMARY OF GUIDELINES
(1) Any sheriff "may" invest the money receipts of his office, including his fees and commissions and taxes collected (except sheriffs in urban-county governments). In other words, his investing such receipts is permissive only. See KRS 446. 010(20).
(2) The short term investments permissible are strictly restricted to those specifically authorized in KRS 66.480, as amended.
(3) The money receipts held by any sheriff must be turned over to the proper authority, as required by statute, and within the statutorily designated time period.
(4) A sheriff may delegate his investment authority to the county treasurer, while strictly observing the time limitations in the turning over of the money held to the proper authorities.
(5) The State Local Finance Officer is required to assist any sheriff in the making of such short term investments.
(6) As relates to investment earnings, the earnings on the investment of school taxes go to the school board. The earnings on county, state, and district taxes may be spent on lawful expenses of his office (other than salaries) , with any remainder going to the county treasury.
CONCLUSION
Any sheriff "may" (permissive only) invest fees or commissions earned by him and taxes collected (except that sheriffs in urban-county governments cannot invest taxes) by him under the precise guidelines outlined above. OAG 78-491, because of the subsequently enacted H.B. 24, 1982, is modified accordingly. It must always be kept in mind that all sheriffs must follow precisely the reporting and disbursing scheduling established by the statutes mentioned herein.
The new legislation, H.B. 24, became effective under an emergency clause, on March 9, 1982, the day the Governor signed the bill. See § 55, Kentucky Constitution.