The 3rd meeting of the Task Force on Local Taxation was held on Tuesday, June 6, 2006, at 10:00 AM, in Room 131 of the Capitol Annex. Senator Damon Thayer, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Damon Thayer, Co-Chair; Representative Charlie Hoffman, Co-Chair; Senators Denise Harper Angel and Ernie Harris; Representatives Steve Riggs and Arnold Simpson; Glenn Caldwell, R. T. (Tucker) Daniel, Tom Guidugli, Steve Hoskins, Vince Lang, Gary Larimore, Bert May, Willie McElroy, Richard Tanner, Bill Thielen, and Larry Whittaker.
Guests: Tom Holocher and Bill Goetz, City of Ft. Mitchell; Gene Weaver and Larry Klein, City of Fort Wright; Jenny Lowery and Angela Copeland, City of Paducah; Bill Sckyer, City of Erlanger; Terry Vance, City of Wilder, Leanne Wafford, City of Nicholasville; Dan McGinley, City of Alexandria; Jerry Deaton, Kentucky League of Cities.
LRC Staff: Pam Thomas, Charlotte Quarles, Lauren Armstrong, Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, and Sheri Mahan.
Judge Daniel moved for the approval of the minutes from the previous meeting. Mayor Guidugli stated that his name had been misspelled in the minutes and asked that it be corrected. Judge Daniel then moved for the approval of the minutes from the previous meeting as amended. Mayor Caldwell seconded the motion. Minutes were approved as amended by voice vote.
Senator Thayer welcomed the members and asked that they take a few minutes to review the recommendation grid available in the member's packets. He then asked each of the members to rank the proposed recommendations in preparation for this discussion.
After reviewing the document, discussion of the proposed task force recommendations began. The discussion was divided into different topic areas to facilitate the debate. The first topic area considered was special district issues. After discussions, the task force agreed upon the following recommendations concerning special districts:
· Fiscal courts should be able to eliminate special districts in a more streamlined and efficient manor.
· Special districts should be required to register through the Governor's Office for Local Development (GOLD) to create a centralized registry. All existing special districts would be required to register through the centralized system within a specified timeframe to retain the ability to continue to operate.
· Special districts created by fiscal courts that are taxing districts should have rates and fees approved by the fiscal court. Taxing districts regulated by the Public Service Commission would be exempted.
· Special taxing districts must present budgets and tax rates to the fiscal court in a timely manner and by a date certain to comply with the county budgeting process.
Representative Hoffman moved for the adoption of these task force recommendations. Second by Representative Simpson. The motion carried by voice vote.
The second topic area discussed concerned tax base conflicts and intergovernmental relationships. After discussion the task force agreed upon the following recommendations concerning this topic area:
· Amend Section 181 of the Constitution to allow the General Assembly in the future to establish a more flexible and efficient local government tax structure.
· If the Constitutional amendment passes, the General Assembly can determine whether local governments should be provided with greater tax flexibility at the local level, and whether a state/local tax sharing arrangement should be developed.
· The task force recognizes that if the amendment passes, statutory programs can be established through legislation that will direct the parameters and conditions under which revenue sharing can occur, including the option of concurrent tax decreases at the state level to offset other authorized levies at the local level.
· If the Constitutional amendment passes, any revenue sharing programs implemented should take into consideration that local governments be required to levy at a specific rate or level locally before being permitted to participate in state/local revenue sharing initiatives. An example of how this might be achieved would be to require local jurisdictions to levy at the maximum rate allowed before recall provisions apply prior to seeking assistance from Frankfort.
Mr. Lang moved for the adoption of these task force recommendations. Second by Judge Whitaker. The motion carried by voice vote.
The third topic area discussed concerned alternative funding sources for local governments. Chairman Thayer led a lengthy discussion on allowing local governments to impose impact fees. Judge Whitaker, Mr. Tanner and Mr. Lang all asked to go on record as to supporting the use of impact fees. There being no consensus, the issue will not be included in the task force recommendations.
The task force next discussed the issue of allowing all classes of cities and counties to impose a gross receipts restaurant tax. Mr. Thielen stated that allowing a broader application of this tax is a matter of need and fairness to cities. Senator Thayer expressed opposition to this recommendation and noted that there would therefor be no consensus. Mr. Thielen moved for a minority recommendation on this issue showing support for allowing all classes of cities and counties to impose a local option restaurant tax holding local tourist and convention commissions harmless, but allowing funds to be used for quality of life expenditures. Mr. May seconded the motion. Motion carried by voice vote. Representative Simpson moved for a roll call vote on the substance of the minority recommendation. Seconded by Senator Thayer. The result of the roll call vote: Senator Harper Angel, No; Representative Riggs, No; Representative Simpson, No; Mayor Caldwell, No; Judge Daniel, Yes; Mayor Guidugli, Yes; Mr. Hoskins, No; Mr. Lang, Yes; Mr. Larimore, Yes; Mr. May, Yes; Mr. McElroy, Yes; Mr. Tanner, Yes; Mr. Thielen, Yes; Senator Thayer, No; and Representative Hoffman, No (8 yes votes and 8 no votes).
Next, the task force discussed the idea of a mandatory financial registry for cities, counties, and special districts with a central database. The task force recommended that a credible local government financial database which includes data from counties, cities and special districts be created and maintained to provide relevant information about local government finances to decision-makers. Mr. May moved for the adoption of this recommendation. Second by Mr. Thielen. Motion carried by voice vote.
The task force then discussed compliance requirements for the insurance premium tax. The task force recommended that legislation should be proposed to require insurance agents and insurance companies to place on every application for insurance the name and tax identification number of the jurisdiction where the risk is located. Penalties should be imposed for willful failure to comply. Mr. Thielen moved for the adoption of this recommendation. Second by Mr. Lang. Motion carried by voice vote.
The task force discussed a revision of the Road Aid Formula. They recommended that the General Assembly study the road aid formula, which has not been significantly amended since 1948. Representative Simpson moved for the adoption of this recommendation. Second by Mr. Thielen. Motion carried by voice vote.
The task force also discussed revising the current method for funding 911 services. The task force recommended that the method for funding 911 services be expanded to allow alternative funding sources due to the declining base caused by a reduction in the number of land lines as people switch to cellular telephone service. Representative Simpson moved for the adoption of this recommendation. Seconded by Mayor Guidugli. Motion carried by voice vote.
Finally, the task force discussed funding for Property Valuation Administrator's offices. The task force recommended creating a dedicated funding source by devoting 2.11 cents of the state rate to fund PVA personnel. Senator Harper Angel moved for the adoption of this recommendation. Seconded by Representative Riggs. Motion carried by voice vote.
Following the discussion of the recommendations, the mayor of Ft. Mitchell addressed the committee about his concern regarding local taxation issues.
There being no further business, the meeting was adjourned at 1:20 p.m.
A tape of this meeting in its entirety is available in the Legislative Research Commission Library.