CoMMoNlirEALTt"l

oF KENTUCHY
OrrIqE
OF THE ATTONNEY
GENEEAL
JACK
CONWAY
ATTORIIEY
GSNEBAL
CArrToL BulL-DlnG' SulTE I I A
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CAFI'AL AVEiIUE
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May 30, 2fi4
Rep.
Jonilenkins
20L0 O'BrienCourt
Shively, Kf 40216
Rs Insffance
Premirrmo
tax
Dear Rep.
Jenkirrs:
Althougtr
this is not a forrral Opinion of the Attorney General' we hopl
that
the views errpressed herein will be of sorne assistance'
You have inquired'
whether a coruolidated
local govemment may dedicate revenue from an insur-
,*". pr*tit*" tax to an.affordable housing t.u$t
fund. We advise that a consol-
idated local gover$merrt may dedicate reve1}ue from atinsutxrce
peltrrinnts tax
to aIl a-ffordable housing
tto*t n*a. The purpcme of the insurance pterdums tax
must be epecified in the ordinance enacting the tarc'
The Louisville Me&o Government
is e consol.idated
local government
containing a city of the firs't class pirm'uar* to KRS Chapter 67C' }n a previous
letrer datJd S*ft. Zf, 201,3, we advised tl'rat a consolidated local governrnent does
not have the arrthority to dedicate an insurance premiurrrs
tax to an affofdable
houoing trust fund. dur previous letter relied upon KRS 91.200(5),
which pro-
vides tt"t Au proceed.s &om license taxes in a consolidated
local government
"shall
be paid to the secreffi and treasurer of the sinking fund'" We previous$
adviscd that KRS 91.200(5) requires that the prxeeds from licenee taxes must be
ded.icated to a sinking t*a; a consotid.ated. local government could not dedicate
insurance premium taxs to an afford.able housing trust fund' At iesue is whether
we should reconsider our prior analysls in light oI KRS 67'1"01(2xd),'which
provides that
"a
consoJrdated.local
governrnent . . . is a eeparate classification of
government which posssses the greater
Povrers
conferted upon, and iS subiect
OPPoRTUNITY
ffi
A* EAUAL
EMPLoYER M/F/o
Page2
to the iesser
restrictions
applicabte
to' county
and cities of the first
class'"
KRs 94281(1)
provides
that'cities
"f-'11
l"*:i-': llryYi-:*:l: *
co{ect
any and uu d**
provided
Ior in Section
181 of the constituson"'
KY'
Colwr. $
181 and KRS 92'2S1(U
are the genTal.sour::t
d taxing authority
for
cities. IGs
g2.2s1tal -p-in""gy provides
hat "this
section
ohall also be subjectto
the provisions
or *xs
g12win
cities of the first class having
a sinking
fund'"
KRS92.281(a)thucexpresslyprovidesthathxwirracityofthefirstdasswitha
siri<inglrrrrda$subjecttoKRSgt'200.KRS91.200(2)providesthat,,licerrse{ees
on a.bueiness,
trade, occupation,
or profession
for revenue
purl'CI8es
may be
imposed
. . . on . . (b) nt" n* pro{its o{ all bwiaesses,
professiol"ts/
or ocsuPa-
tiorrsfromactivitiesconaucteainthecity.,,.KRggl.200(5)providesthaJ,,lilerye
'fees
or taxes ,f',uff i* .oUu"t"a
by the clutmissioners
of the sinking
fund' The
proceeds from the taxes shaltr be'paid
to the secxetarT
and the fteasuret
of the
sinking
tund . . . ., }gs 91.200(5)
tiruc requiree u .tg of the i:rst class to dedicate
ali of the revenue fromlicerrse
ta:<es to the citls sinking
fund'
In our previous
letfier, we relied' upon the futt-
Y.ltnuisville
Mebo
con-
tained a city of the first
class, and. not tuing
Presented
with any sbtutory author-
ity tCI the co:rtrary, concluded
that l"olli$Yiil; Metro
was bound by KRS 91'200(5)
to dedicate
all [cense
tryes to ib sinking
fund. Horuevl+
you havl asked
{or
ctarification
or o*
frio,
opinion,n
light of KRs 67c'1-01(2xd)'
whidr
provides
that,a
consolidatedlocal
government
is neither a city govemment
nor a county
government
. . . but it is alparaie
classification
of gavernment
whidr
posses$es
tlre greater
tr}0wels
con{ured
upon" and is sublect to the
lesser
restrictrons
appli-
cable to, county
gorru*,tuq
and cities
o{ the first
class"' KRS 67C'L01(2Xd)
establishes
the distinct
entity of the eonsolid'ated'
local goverrrrrent'
and provides
that it has all of the pow#ana
the lessef
of the restricfions
applicable
to coun-
tres and citiee.
Although KRS 91.200(5) requires cities of the first class to dedicate license
taxes to the cit5/s sinking fundo a county tax is not so restricted'
KRS 91A'0s0(14)
expressly
p*,;d* that,,a
county may impose
a license.fee
or tax,, on irrsurafice
companies.
There is no parallei requirement
tlrat a county must dedicate the
proceeds of a licerrse fee or tax
jo a sinking fil1ld. since a mnsolidated
local
government
is only sublect to the 1eesff of the resbictionE
appiicable
to counties
I
1
Page 3
and cities, and, the res'tfictions
on the use of inrurarrce'
premium
fees or taxeF are
leseer for counfles,
a congolidated
locai
govemurent
is only subject to couxly
restrictions
on insurance
premium
lees or taxes'
Given
that a consolid"ated.l0cal
govelmert
is only
sub,ect
l
mulB
restrictions
on the use of insuraffe
prd:o*
{ees or taxgs'
t}e resUictions
t'hat
apply {epen{
uponwhether
tlhe insuranee
prenriurn
chdrge is a fee or a hx' }cY'
Cor'1sf,. S
180
prortrideo
that "evyy
*di*ot*
and resolution
passed by any
county,
city, town or municipal
boad ot local legislative
body' levying
a tax'
sha1l specify
distinctiy
tlte pr:rpose
for which 8tiid
tax is levied'"
similarly'
KRS
6s.100(1)providestlrat,,allcountytaxesshallbeteviedbyorderorreso}utionof
rhe fiscal
court. Td;*p*"
ror w6ictt each tax is levied st*11 be specified
in the
otder or resolution
"
.
' ';
fv' CoNs"r' $
180 and KSS 68'100
both require a county
to specify
the purpooe of any tax levied'
However,
fur Pute NIik Produsrs
& Diattibators
Ass'ra
v' Morfun'
7?5
s.w,zd
n6
tKy,ttlll,it
was held tt'at,,in respect
of section
180 of the Consfitu-
tion, it has been held in this
iruisdiction
*ai Ucens* feeo
are not a 'tax'
in tt$
senge of that section of the Corstihrtioo
and it is not necassary
that an ordinance
impooing
license fees specify
the purpoees o{
yme-1rf
ihat license fes are
authorlabd
by section rg1 of the constilfltion"
ld' at218-19'
License fees are not
taxes for the purposes of $
180. lnsteadit}ey
are governed by Kv' coNsr' $
181'
whichprovides
*:.,*r*rr"ct"ra
Assernblymay
delegate'the
power to counties
'
. . to impose
and" coll*t tifensb fees . . .-on ftaachises,
trades, occupafions
and
profeesions-' $
181 arrthorizes
counties to impose
fees onprofesions'
and
contains no requirexrentthat
fte purpose of thefee be specified'
Both lGs 91.200 and KRS 91A.080 tmtlicense
fues and taxee onirrsurance
compaerie*
as interc}angeable,
and allow the irnposition
of either' The diednction
between a licenee Iee and a license
tax i8 ftat "a
licen$e carriss with it a rcgUlato-
ry
function
and a ficense tax is a hx on the right to exercise
a business
ptivilege
which ie commonly
regulated,
carrying
with it * *:f*
of the police power
and superrristo4.
an Jcupatior,al
ta;<*is founded
solely on tln pmduction
o{
revernle." Cornrnissionsrs
E
Sir*l"g Pund o! City af l*'lnfiCIitle
o' Hopy/n'
613 S'W'2d
62L,6?3(Ky.Cr
app. rgao). License fees
are authodzed
under the police po\^retr
for regula*on of indirsgies, while license taxes are authorized
for the purposes of
Page4
genefating
revenue, II} dlis casb, if the proceeds
of an insffance
PreilLium
durge
are dedictted to an affordable housing
tni.st iund,
they would not be {or the
regulation of the insurance
industry,
but wauld be used to generate revenue'
Therefore,
the iirsurance
premiurn
"i*g"
would^ constitut:
a talr' and be subject
to rhe requirements
in Ky. coxsr. $
180 and KES 68.100(1)
that the p.urpose of the
tax must be speeified in the ordiaance'
h: eurnmary, we advise that a consolidated
local govetnrnerrt'may
dedi-
eate the proceeds of an infilrance
premiums
tax to any valid public pllxpo:e'
includinf an aJford^able housing hru$t/ as long as that purpose is specilied in the
ordinance
levYi4g the tax,
Yours verY mlY,
IACf(COI{WAY
ATTORNEY
GENERAL
wfr^*
Mattfames
Assistant AtiorneY General
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