City Not Limited to 45 Days to Set Property Tax Rate Where It Adopted County Assessments
In Light v. City of Louisville, 248 S.W. 3d 559 (Ky. 2008), the Supreme Court of Kentucky (“Supreme Court”) held that the City of Louisville, which established its ad valorem tax rate based upon Jefferson County’s assessments, pursuant to KRS 132.285, was not required to set the city tax rate within 45 days of certification of the property tax rolls.
Eric P. Light and Connie Light (“Lights”) represent a class of taxpayers within the City of Louisville (“City”). The Lights claimed that, pursuant to KRS 132.0225, the City improperly set its ad valorem tax rates in excess of the compensation rate for 1998 and 1999 when the City adopted the county rolls by ordinance more than 45 days after the county property tax rolls were certified by the Revenue Cabinet (now known as the Department of Revenue).
The Lights filed their complaint seeking refunds with the Jefferson Circuit Court. There, the City defended by arguing that KRS 132.0225, which provides in part that all local taxing districts must establish their ad valorem tax rates within 45 days of the certification of the county property tax rolls or be limited to the compensating rate for the year, did not apply to it. The City also asserted that it set the 1998 and 1999 rates by ordinance pursuant to KRS 132.285. KRS 132.285 provides that cities that adopt a county’s assessments may set the time to establish their tax rates notwithstanding any other statute to the contrary. On cross-motions for summary judgment, the Jefferson Circuit Court held that the City was a local taxing district within the meaning of KRS 132.0225, but that KRS 132.285 applied. That Court determined that KRS 132.285 was the more specific statute and the rules of statutory construction required the specific to control the more general statute. Therefore, the Court concluded that the 45 day period of KRS 132.0225 did not apply to the City, and that the City could set its tax.
The Court of Appeals affirmed the Jefferson Circuit Court’s dismissal of the Light’s claim on slightly different grounds. The Court of Appeals held that KRS 132.0225 was ambiguous, and based on the legislative history and viewed in context with KRS 132.285, it did not apply to those cities that mailed ad valorem tax bills separately from county tax bills. The Court of Appeals held that the purpose of KRS 132.0225 was to ensure that taxing districts did not delay the issuance of bills issued jointly with the county by failing to set rates in a timely manner. Accordingly, the Court of Appeals concluded that KRS 132.0225 did not apply because the City mailed its tax bills separately from the county.
The Supreme Court agreed with the Lights to the extent that the City is a taxing district within the meaning of KRS 132.0225 and that the statute is clear and unambiguous. Accordingly, as there was no ambiguity, the Court determined that legislative history could not be used to determine the statute’s meaning. The Supreme Court held that, “The statute establishes no exceptions to the term taxing district nor does it provide that the statute only applies to taxing districts that utilize the county tax bill.” Thus, the Court of Appeals’ construction would have established an exemption to the statute that the General Assembly did not create, according to the Supreme Court. Accordingly, the Supreme Court vacated that portion of the Court of Appeals’ Opinion.
The Supreme Court then held that while the City was a taxing district for purposes of KRS 132.0225, KRS 132.285 granted the City broad powers regarding the procedure for setting ad valorem rates when it elected to adopt the county assessment for rate setting purposes. The plain language of the statute enabled the City to fix the time for establishing rates “notwithstanding any statutory provisions to the contrary.” KRS 132.285.
The Supreme Court rejected the Light’s claim that there was no conflict between the two statutes and that KRS 132.285 simply allows cities to fix the time for establishing rates at any time within the 45 day confines of KRS 132.0225. Applying the rules of statutory construction, the Supreme Court held that statutes in conflict should be resolved to give effect to both as harmonized, but that the more specific statute controls over the more general of the two. The Supreme Court therefore agreed with the Jefferson Circuit Court that KRS 132.285 was the more specific statute and superseded KRS 132.0225 in regard to the time for establishing tax rates, where a city elects to adopt the county tax assessments for purposes of setting city tax rates. The Supreme Court also rejected the Light’s claim that this construction of the two statutes negated the “rollback” provisions contained elsewhere in KRS Chapter 132.