King v. Campbell County, 2005-CA-001841-MR.

• Court: Kentucky Court of Appeals
• Writing for the Court: Abramson
• Citation: King v. Campbell County, 217 S.W.3d 862 (Ky. Ct. App. 2006)
• Decision Date: 03 November 2006
• Docket Number: No. 2005-CA-001841-MR.,2005-CA-001841-MR.
• Parties: Mark KING, Appellant, v. CAMPBELL COUNTY, Kentucky, Appellee.

217 S.W.3d 862

Mark KING, Appellant, v. CAMPBELL COUNTY, Kentucky, Appellee.

No. 2005-CA-001841-MR.

Court of Appeals of Kentucky.

November 3, 2006.

Discretionary Review Denied by Supreme Court April 11, 2007.

Robert R. Sparks, Parry Deering Futscher & Sparks, Covington, KY, for appellant.

Jeffrey C. Mando, Joy A. Moore, Adams, Stepner, Woltermann & Dusing P.L.L.C., Covington, Justin D. Verst, Campbell County Attorney, Newport, for appellee.

Before ABRAMSON and VANMETER, Judges; KNOPF,¹ Senior Judge.

OPINION

ABRAMSON, Judge.

Kentucky Revised Statute (KRS) 68.197 authorizes the fiscal court of each county having a population of 30,000 or more to impose an occupational license fee upon individual incomes and business net profits. In a March 2005 amendment to this statute, the General Assembly eliminated a credit which county taxpayers were allowed for city occupational license fees they had paid for the same period. The amendment applies to "those counties where a license fee has been authorized by a public question approved by the voters." Apparently only two counties, Campbell and Kenton, meet this description. The General Assembly also provided that the amendment would apply retroactively, thus eliminating not only any future credits, but also any unclaimed credits that may have been due in the past. Mark King, a Campbell County taxpayer, on his own behalf and purportedly on behalf of other Campbell County taxpayers, alleges that the amendment's application to only two counties runs afoul of the constitutional proscription against special legislation and that its retroactive application violates both the constitutional guarantee of due process and the constitutional mandate regarding the separation of powers. King also maintains that Campbell County did not validly enact its original license fee ordinance. Agreeing with the trial court that the March 2005 amendment to KRS 68.197 is not unconstitutional and that the Campbell County fee ordinance is valid, we affirm the dismissal of King's complaint.

Campbell County first enacted its occupational license fee ordinance in 1978. At that time, KRS 68.197 required that license fee ordinances be authorized in a public question approved by the voters. The statute also permitted, but did not require, a credit against county license fees for city license fees paid for the same period. One of the principal projects to be funded by the Campbell County fee was the Transit Authority of Northern Kentucky (TANK). Accordingly, the fiscal court adopted Ordinance 1-78, which imposed a 0.4% license fee to be incorporated in the general revenue fund of the county and to be used as follows:

(a) . . . in defraying the current, general and incidental expenses of the county;

(b) To appropriate and pay over to the Transit authority of Northern Kentucky capital and operating funds as provided in K.R.S. Chapter 96A.

(c) For traffic improvement and mass transportation related projects as authorized by the Fiscal Court. Campbell County Ordinance 1-78 § 11 (July 1978).

The public question put to Campbell County voters in November 1978 asked,

Are you in favor of continuing bus service in Campbell County through a continuation of the general fund license fee which took effect July 1, 1978, whereby salaries, wages, commissions, net profits and other compensation earned within the county will be subject to a rate set annually by the fiscal court not to exceed one (1%) percent as authorized by Kentucky Revised Statutes, Section 68.197?

King contends that this ballot question failed to apprise voters that the license fee could be used for purposes other than "bus service" and that the ordinance is thus invalid at least to the extent that it purports to authorize other uses. The trial court ruled that the ballot adequately raised the question of a "general fund license fee" and that the ordinance was valid. We agree.

King is correct that public questions presented to voters by ballot must accurately and fully represent the matters being considered. Chandler v. City of Winchester, 973 S.W.2d 78 (Ky.App.1998). Cf. KRS 83A.120 (requiring for municipal public-question elections that "[t]he resolution or petition shall set out in full the matter to be considered."). But we agree with the trial court that the Campbell County ballot question met this requirement. The question clearly identified the fee as a "general fund license fee," accurately presented bus service as one of the expenses to which the fee was to be dedicated, and did not suggest that bus service was the exclusive purpose for the fee.

We note, furthermore, that election challenges based on the wording of a public question constitute election contests governed by KRS 120.250, which requires that such contests be brought within thirty days after the election. Forrester v. Terry, 357 S.W.2d 308 (Ky.1962) (applying prior law); Chandler v. City of Winchester, supra (applying KRS 120.280's fifteen day limitation period for election contests challenging constitutional amendments). King's challenge to the ballot question must also be dismissed, therefore, because it is untimely.

We turn next to King's contentions regarding the constitutionality of the March 2005 amendment. At about the time that Campbell County adopted Ordinance 1-78, Kenton County adopted a similar ordinance authorizing its occupational license fee. These two counties, apparently, were the only ones to adopt license fees under the public-question procedure. In 1986, the General Assembly amended KRS 68.197 and eliminated the public-question requirement. Henceforth, fiscal courts were authorized to impose occupational license fees without voter ratification. At the same time, however, the General Assembly required, rather than permitted, that county fees "imposed" after July 1986 be subject to a credit for city license fees. According to King, since the 1986 amendment eliminating the voter ratification requirement and mandating the city fee credit, more than thirty counties have adopted occupational license fees pursuant to KRS 68.197.

After July 1986, both Kenton and Campbell Counties increased the rate of their fees. Campbell County increased its rate to 0.8% and then 0.9% in September 1986 and December 1999, respectively. Kenton County upped its rate in 2001 to 0.7403%. Both counties took the position that these rate increases merely modified their pre-July 1986 fees and that because they did not "impose" new fees after that date the increases were not subject to the city fee credit. Kenton County taxpayers challenged that interpretation in a lawsuit filed soon after the Kenton County rate increase went into effect in January 2001. The case, styled City of Covington v. Kenton County, eventually made its way to our Supreme Court. In November 2004, that Court reversed a decision by this Court upholding Kenton County's interpretation of the statute and held that the post-July 1986 Kenton County rate increase amounted to the imposition of a new fee and thus the Kenton County license fee was, to the extent of the increase, subject to the mandatory city fee credit. City of Covington v. Kenton County, 149 S.W.3d 358 (Ky. 2004).

The Supreme Court's decision prompted both this Campbell County suit, which was filed March 9, 2005, and the aforementioned March 16, 2005 amendment to KRS 68.197 by the General Assembly. This suit seeks a refund of all Campbell County license fees, back to 1986, that, according to the Supreme Court, were subject to the city fee credit. The amendment, also known as House Bill 400, included the following declaration of the General Assembly's intent:

It is necessary to clarify the General Assembly's original intention that it is not the intent of the General Assembly to bring financial hardship upon a county from the crediting or refunding of fees when the county has acted in good faith to provide for the needs of its community by the imposition of a license fee authorized by this section. . . . Whereas, recent judicial interpretations of KRS 68.197 could result in catastrophic financial hardship for some Kentucky counties, an emergency is declared to exist, and this Act takes effect upon its passage and approval by the Governor or upon its otherwise becoming a law.

Campbell County moved to dismiss King's complaint based on the following provisions of House Bill 400, which are clearly intended to foreclose the relief King seeks:

(10) (a) In those counties where a license fee has been authorized by a public question approved by the voters, there shall be no credit of a city license fee against a county license fee except by agreement between the county and the city in accordance with subsection (6) of this section;

(b) Notwithstanding any provision of the KRS to the contrary, no taxpayer shall be refunded or credited for any overpayment of a license tax paid to any county to the extent the overpayment is attributable to or derives from KRS 68.197 as it existed at any time subsequent to July 15, 1986, and the taxpayer seeks a credit for a license tax paid to a city located with such county, if such refund claim or amended tax return claim was filed or perfected after November 18, 2004, except by agreement between the city and county in accordance with subsection (6) of this section; . . .

(d) This subsection shall have retroactive application.

In response, King argued that to the extent the amendment singles out "those counties where a license fee has been authorized by a public question" it amounts to special legislation in violation of Section 59 of the Constitution of Kentucky. He further maintained that to the extent that it purports to apply retroactively to refund claims, such as his own, filed after November 18, 2004 (the date of the Supreme Court's decision), but before the effective date of the amendment, it violates the Constitution's due process and separation of powers provisions. In an August 29, 2005 order, the trial...